Correlation Between NOVATECH and Woori Technology
Can any of the company-specific risk be diversified away by investing in both NOVATECH 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 NOVATECH and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVATECH Co and Woori Technology Investment, you can compare the effects of market volatilities on NOVATECH 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 NOVATECH with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and Woori Technology.
Diversification Opportunities for NOVATECH and Woori Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NOVATECH and Woori is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co 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 NOVATECH 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 NOVATECH 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 Inv has no effect on the direction of NOVATECH i.e., NOVATECH and Woori Technology go up and down completely randomly.
Pair Corralation between NOVATECH and Woori Technology
Assuming the 90 days trading horizon NOVATECH is expected to generate 34.92 times less return on investment than Woori Technology. But when comparing it to its historical volatility, NOVATECH Co is 1.32 times less risky than Woori Technology. It trades about 0.0 of its potential returns per unit of risk. Woori Technology Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 540,000 in Woori Technology Investment on October 19, 2024 and sell it today you would earn a total of 259,000 from holding Woori Technology Investment or generate 47.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVATECH Co vs. Woori Technology Investment
Performance |
| Timeline |
| NOVATECH |
| Woori Technology Inv |
NOVATECH and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and Woori Technology
The main advantage of trading using opposite NOVATECH and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH 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.| NOVATECH vs. Hanshin Construction Co | NOVATECH vs. A Tech Solution Co | NOVATECH vs. Seohee Construction Co | NOVATECH vs. Woorim Machinery Co |
| Woori Technology vs. Humasis Co | Woori Technology vs. JUSUNG ENGINEERING Co | Woori Technology vs. Winix Inc | Woori Technology vs. AfreecaTV 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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