Correlation Between Woorim Machinery and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Daewoo Engineering 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 Daewoo Engineering 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 Daewoo Engineering Construction, you can compare the effects of market volatilities on Woorim Machinery and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Daewoo Engineering.
Diversification Opportunities for Woorim Machinery and Daewoo Engineering
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Woorim and Daewoo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Daewoo Engineering go up and down completely randomly.
Pair Corralation between Woorim Machinery and Daewoo Engineering
Assuming the 90 days trading horizon Woorim Machinery is expected to generate 2.34 times less return on investment than Daewoo Engineering. In addition to that, Woorim Machinery is 1.18 times more volatile than Daewoo Engineering Construction. It trades about 0.06 of its total potential returns per unit of risk. Daewoo Engineering Construction is currently generating about 0.16 per unit of volatility. If you would invest 337,500 in Daewoo Engineering Construction on November 27, 2024 and sell it today you would earn a total of 21,500 from holding Daewoo Engineering Construction or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| Woorim Machinery |
| Daewoo Engineering |
Woorim Machinery and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Daewoo Engineering
The main advantage of trading using opposite Woorim Machinery and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| Woorim Machinery vs. LG Household Healthcare | Woorim Machinery vs. Sewoon Medical Co | Woorim Machinery vs. DB Financial Investment | Woorim Machinery vs. Green Cross Medical |
| Daewoo Engineering vs. Bookook Steel | Daewoo Engineering vs. Hyundai BNG Steel | Daewoo Engineering vs. GAMEVIL | Daewoo Engineering vs. Netmarble Games Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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