Correlation Between DataSolution and Woori Technology
Can any of the company-specific risk be diversified away by investing in both DataSolution 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 DataSolution and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DataSolution and Woori Technology, you can compare the effects of market volatilities on DataSolution 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 DataSolution with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of DataSolution and Woori Technology.
Diversification Opportunities for DataSolution and Woori Technology
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between DataSolution and Woori is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding DataSolution and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and DataSolution 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 DataSolution 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 has no effect on the direction of DataSolution i.e., DataSolution and Woori Technology go up and down completely randomly.
Pair Corralation between DataSolution and Woori Technology
Assuming the 90 days trading horizon DataSolution is expected to generate 1.72 times less return on investment than Woori Technology. In addition to that, DataSolution is 1.45 times more volatile than Woori Technology. It trades about 0.13 of its total potential returns per unit of risk. Woori Technology is currently generating about 0.31 per unit of volatility. If you would invest 177,600 in Woori Technology on October 20, 2024 and sell it today you would earn a total of 26,900 from holding Woori Technology or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DataSolution vs. Woori Technology
Performance |
| Timeline |
| DataSolution |
| Woori Technology |
DataSolution and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DataSolution and Woori Technology
The main advantage of trading using opposite DataSolution and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DataSolution 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.| DataSolution vs. Korea Information Communications | DataSolution vs. Shinhan Inverse Copper | DataSolution vs. KT Submarine Telecom | DataSolution vs. Daiyang Metal Co |
| Woori Technology vs. DB Financial Investment | Woori Technology vs. Genie Music | Woori Technology vs. Daelim Trading Co | Woori Technology vs. SBI Investment KOREA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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