Correlation Between Cube Entertainment and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Cube Entertainment and Woori Technology 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 Cube Entertainment and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cube Entertainment and Woori Technology Investment, you can compare the effects of market volatilities on Cube Entertainment and Woori Technology 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 Cube Entertainment with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cube Entertainment and Woori Technology.
Diversification Opportunities for Cube Entertainment and Woori Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cube and Woori is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cube Entertainment and Woori Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology Inv and Cube Entertainment 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 Cube Entertainment are associated (or correlated) with Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology Inv has no effect on the direction of Cube Entertainment i.e., Cube Entertainment and Woori Technology go up and down completely randomly.
Pair Corralation between Cube Entertainment and Woori Technology
Assuming the 90 days trading horizon Cube Entertainment is expected to generate 0.74 times more return on investment than Woori Technology. However, Cube Entertainment is 1.35 times less risky than Woori Technology. It trades about 0.05 of its potential returns per unit of risk. Woori Technology Investment is currently generating about 0.02 per unit of risk. If you would invest 1,438,000 in Cube Entertainment on September 1, 2024 and sell it today you would earn a total of 200,000 from holding Cube Entertainment or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cube Entertainment vs. Woori Technology Investment
Performance |
| Timeline |
| Cube Entertainment |
| Woori Technology Inv |
Cube Entertainment and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cube Entertainment and Woori Technology
The main advantage of trading using opposite Cube Entertainment and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cube Entertainment position performs unexpectedly, Woori Technology 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 Woori Technology will offset losses from the drop in Woori Technology's long position.The idea behind Cube Entertainment and Woori Technology Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Woori Technology vs. Samsung Electronics Co | Woori Technology vs. Samsung Electronics Co | Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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