Correlation Between Wooyang and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Wooyang 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 Wooyang and Dongwoo Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wooyang Co and Dongwoo Farm To, you can compare the effects of market volatilities on Wooyang 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 Wooyang with a short position of Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wooyang and Dongwoo Farm.
Diversification Opportunities for Wooyang and Dongwoo Farm
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wooyang and Dongwoo is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wooyang 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 Wooyang 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 Wooyang 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 Wooyang i.e., Wooyang and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Wooyang and Dongwoo Farm
Assuming the 90 days trading horizon Wooyang Co is expected to generate 3.12 times more return on investment than Dongwoo Farm. However, Wooyang is 3.12 times more volatile than Dongwoo Farm To. It trades about 0.03 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.08 per unit of risk. If you would invest 288,000 in Wooyang Co on August 29, 2024 and sell it today you would earn a total of 33,500 from holding Wooyang Co or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wooyang Co vs. Dongwoo Farm To
Performance |
| Timeline |
| Wooyang |
| Dongwoo Farm To |
Wooyang and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wooyang and Dongwoo Farm
The main advantage of trading using opposite Wooyang and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wooyang 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.| Wooyang vs. Miwon Chemicals Co | Wooyang vs. Golden Bridge Investment | Wooyang vs. Mgame Corp | Wooyang vs. Atinum Investment 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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