Correlation Between Woorim Machinery and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Dongwoo Farm 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 Dongwoo Farm 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 Dongwoo Farm To, you can compare the effects of market volatilities on Woorim Machinery and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Dongwoo Farm.
Diversification Opportunities for Woorim Machinery and Dongwoo Farm
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Woorim and Dongwoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Woorim Machinery and Dongwoo Farm
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.98 times more return on investment than Dongwoo Farm. However, Woorim Machinery is 1.98 times more volatile than Dongwoo Farm To. It trades about 0.13 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.18 per unit of risk. If you would invest 516,000 in Woorim Machinery Co on August 29, 2024 and sell it today you would earn a total of 35,000 from holding Woorim Machinery Co or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Dongwoo Farm To
Performance |
| Timeline |
| Woorim Machinery |
| Dongwoo Farm To |
Woorim Machinery and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Dongwoo Farm
The main advantage of trading using opposite Woorim Machinery and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Woorim Machinery vs. MediaZen | Woorim Machinery vs. Daewon Media Co | Woorim Machinery vs. Dong A Steel Technology | Woorim Machinery vs. Fine Besteel Co |
| Dongwoo Farm vs. J Steel Co | Dongwoo Farm vs. Hanil Iron Steel | Dongwoo Farm vs. DAEDUCK ELECTRONICS CoLtd | Dongwoo Farm vs. Han Kook Steel |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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