Correlation Between Woorim Machinery and Infinitt Healthcare
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Infinitt Healthcare 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 Infinitt Healthcare 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 Infinitt Healthcare Co, you can compare the effects of market volatilities on Woorim Machinery and Infinitt Healthcare 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 Infinitt Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Infinitt Healthcare.
Diversification Opportunities for Woorim Machinery and Infinitt Healthcare
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woorim and Infinitt is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Infinitt Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinitt Healthcare 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 Infinitt Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinitt Healthcare has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Infinitt Healthcare go up and down completely randomly.
Pair Corralation between Woorim Machinery and Infinitt Healthcare
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 3.42 times more return on investment than Infinitt Healthcare. However, Woorim Machinery is 3.42 times more volatile than Infinitt Healthcare Co. It trades about 0.19 of its potential returns per unit of risk. Infinitt Healthcare Co is currently generating about 0.24 per unit of risk. If you would invest 473,500 in Woorim Machinery Co on October 26, 2024 and sell it today you would earn a total of 59,500 from holding Woorim Machinery Co or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Infinitt Healthcare Co
Performance |
| Timeline |
| Woorim Machinery |
| Infinitt Healthcare |
Woorim Machinery and Infinitt Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Infinitt Healthcare
The main advantage of trading using opposite Woorim Machinery and Infinitt Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Infinitt Healthcare 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 Infinitt Healthcare will offset losses from the drop in Infinitt Healthcare's long position.| Woorim Machinery vs. Innowireless Co | Woorim Machinery vs. Korea Investment Holdings | Woorim Machinery vs. Korea Information Communications | Woorim Machinery vs. Sangsangin Investment Securities |
| Infinitt Healthcare vs. Tae Kyung Chemical | Infinitt Healthcare vs. SeAH Besteel Corp | Infinitt Healthcare vs. Wonil Special Steel | Infinitt Healthcare vs. Korea Petro Chemical |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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