Correlation Between Jin Air and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Jin Air 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 Jin Air and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and Woori Technology, you can compare the effects of market volatilities on Jin Air 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 Jin Air with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Woori Technology.
Diversification Opportunities for Jin Air and Woori Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jin and Woori is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and Jin Air 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 Jin Air Co 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 Jin Air i.e., Jin Air and Woori Technology go up and down completely randomly.
Pair Corralation between Jin Air and Woori Technology
Assuming the 90 days trading horizon Jin Air Co is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, Jin Air Co is 1.61 times less risky than Woori Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Woori Technology is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 177,800 in Woori Technology on November 8, 2024 and sell it today you would earn a total of 24,700 from holding Woori Technology or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jin Air Co vs. Woori Technology
Performance |
| Timeline |
| Jin Air |
| Woori Technology |
Jin Air and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jin Air and Woori Technology
The main advantage of trading using opposite Jin Air and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air 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.| Jin Air vs. SM Entertainment Co | Jin Air vs. SKONEC Entertainment Co | Jin Air vs. Jeju Beer Co | Jin Air vs. Worldex Industry Trading |
| Woori Technology vs. SS TECH | Woori Technology vs. Orbitech Co | Woori Technology vs. Raontech | Woori Technology vs. TJ media Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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