Correlation Between Woorim Machinery and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Hana 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 Hana 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 Hana Materials, you can compare the effects of market volatilities on Woorim Machinery and Hana 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 Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Hana Materials.
Diversification Opportunities for Woorim Machinery and Hana Materials
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woorim and Hana is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Hana Materials go up and down completely randomly.
Pair Corralation between Woorim Machinery and Hana Materials
Assuming the 90 days trading horizon Woorim Machinery is expected to generate 1.11 times less return on investment than Hana Materials. But when comparing it to its historical volatility, Woorim Machinery Co is 1.09 times less risky than Hana Materials. It trades about 0.16 of its potential returns per unit of risk. Hana Materials is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,375,000 in Hana Materials on October 14, 2024 and sell it today you would earn a total of 255,000 from holding Hana Materials or generate 10.74% 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. Hana Materials
Performance |
| Timeline |
| Woorim Machinery |
| Hana Materials |
Woorim Machinery and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Hana Materials
The main advantage of trading using opposite Woorim Machinery and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Hana 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Woorim Machinery vs. Nice Information Telecommunication | Woorim Machinery vs. NewFlex Technology Co | Woorim Machinery vs. Alton Sports CoLtd | Woorim Machinery vs. HB Technology TD |
| Hana Materials vs. Daishin Information Communications | Hana Materials vs. Keyang Electric Machinery | Hana Materials vs. Woorim Machinery Co | Hana Materials vs. Camus Engineering Construction |
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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