Correlation Between Woorim Machinery and UJU Electronics
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and UJU Electronics 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 UJU Electronics 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 UJU Electronics Co, you can compare the effects of market volatilities on Woorim Machinery and UJU Electronics 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 UJU Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and UJU Electronics.
Diversification Opportunities for Woorim Machinery and UJU Electronics
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woorim and UJU is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and UJU Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UJU Electronics 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 UJU Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UJU Electronics has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and UJU Electronics go up and down completely randomly.
Pair Corralation between Woorim Machinery and UJU Electronics
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.05 times more return on investment than UJU Electronics. However, Woorim Machinery is 1.05 times more volatile than UJU Electronics Co. It trades about 0.05 of its potential returns per unit of risk. UJU Electronics Co is currently generating about -0.25 per unit of risk. If you would invest 524,000 in Woorim Machinery Co on August 24, 2024 and sell it today you would earn a total of 13,000 from holding Woorim Machinery Co or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. UJU Electronics Co
Performance |
| Timeline |
| Woorim Machinery |
| UJU Electronics |
Woorim Machinery and UJU Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and UJU Electronics
The main advantage of trading using opposite Woorim Machinery and UJU Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, UJU Electronics 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 UJU Electronics will offset losses from the drop in UJU Electronics' long position.| Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. Hyundai Motor Co | Woorim Machinery vs. Hyundai Motor |
| UJU Electronics vs. Nam Hwa Construction | UJU Electronics vs. KEPCO Engineering Construction | UJU Electronics vs. Woorim Machinery Co | UJU Electronics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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