Correlation Between Woorim Machinery and Booster
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Booster at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Woorim Machinery and Booster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woorim Machinery Co and Booster Co, you can compare the effects of market volatilities on Woorim Machinery and Booster and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Woorim Machinery with a short position of Booster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Booster.
Diversification Opportunities for Woorim Machinery and Booster
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woorim and Booster is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Booster Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booster and Woorim Machinery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Woorim Machinery Co are associated (or correlated) with Booster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booster has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Booster go up and down completely randomly.
Pair Corralation between Woorim Machinery and Booster
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 2.95 times more return on investment than Booster. However, Woorim Machinery is 2.95 times more volatile than Booster Co. It trades about 0.01 of its potential returns per unit of risk. Booster Co is currently generating about -0.03 per unit of risk. If you would invest 573,218 in Woorim Machinery Co on September 13, 2024 and sell it today you would lose (102,718) from holding Woorim Machinery Co or give up 17.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Booster Co
Performance |
| Timeline |
| Woorim Machinery |
| Booster |
Woorim Machinery and Booster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Booster
The main advantage of trading using opposite Woorim Machinery and Booster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Booster can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Booster will offset losses from the drop in Booster's long position.| Woorim Machinery vs. LG Household Healthcare | Woorim Machinery vs. Dong A Steel Technology | Woorim Machinery vs. Orbitech Co | Woorim Machinery vs. Choil Aluminum |
| Booster vs. Lotte Chilsung Beverage | Booster vs. Kyeryong Construction Industrial | Booster vs. Woorim Machinery Co | Booster vs. Hanshin Construction Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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