Correlation Between Humasis and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Humasis and Woorim Machinery 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 Humasis and Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humasis Co and Woorim Machinery Co, you can compare the effects of market volatilities on Humasis and Woorim Machinery 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 Humasis with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humasis and Woorim Machinery.
Diversification Opportunities for Humasis and Woorim Machinery
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Humasis and Woorim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery and Humasis 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 Humasis Co are associated (or correlated) with Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Humasis i.e., Humasis and Woorim Machinery go up and down completely randomly.
Pair Corralation between Humasis and Woorim Machinery
Assuming the 90 days trading horizon Humasis Co is expected to generate 3.64 times more return on investment than Woorim Machinery. However, Humasis is 3.64 times more volatile than Woorim Machinery Co. It trades about 0.14 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about 0.12 per unit of risk. If you would invest 151,500 in Humasis Co on August 29, 2024 and sell it today you would earn a total of 34,900 from holding Humasis Co or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humasis Co vs. Woorim Machinery Co
Performance |
| Timeline |
| Humasis |
| Woorim Machinery |
Humasis and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humasis and Woorim Machinery
The main advantage of trading using opposite Humasis and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humasis position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Humasis vs. LabGenomics Co | Humasis vs. Seegene | Humasis vs. Access Bio | Humasis vs. Woori Technology Investment |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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