Correlation Between Woorim Machinery and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Phoenix Materials 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 Phoenix Materials 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 Phoenix Materials Co, you can compare the effects of market volatilities on Woorim Machinery and Phoenix Materials 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 Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Phoenix Materials.
Diversification Opportunities for Woorim Machinery and Phoenix Materials
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woorim and Phoenix is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials 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 Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Phoenix Materials go up and down completely randomly.
Pair Corralation between Woorim Machinery and Phoenix Materials
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 0.81 times more return on investment than Phoenix Materials. However, Woorim Machinery Co is 1.24 times less risky than Phoenix Materials. It trades about 0.0 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.02 per unit of risk. If you would invest 702,181 in Woorim Machinery Co on October 13, 2024 and sell it today you would lose (175,181) from holding Woorim Machinery Co or give up 24.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.27% |
| Values | Daily Returns |
Woorim Machinery Co vs. Phoenix Materials Co
Performance |
| Timeline |
| Woorim Machinery |
| Phoenix Materials |
Woorim Machinery and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Phoenix Materials
The main advantage of trading using opposite Woorim Machinery and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.| Woorim Machinery vs. Next Entertainment World | Woorim Machinery vs. SKONEC Entertainment Co | Woorim Machinery vs. SAMG Entertainment Co | Woorim Machinery vs. MEDIANA CoLtd |
| Phoenix Materials vs. Woorim Machinery Co | Phoenix Materials vs. Seohee Construction Co | Phoenix Materials vs. WONIK Materials CoLtd | Phoenix Materials vs. LG Household Healthcare |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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