Correlation Between Solution Advanced and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Woorim Machinery Co, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Woorim Machinery.
Diversification Opportunities for Solution Advanced and Woorim Machinery
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solution and Woorim is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery and Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and Woorim Machinery go up and down completely randomly.
Pair Corralation between Solution Advanced and Woorim Machinery
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 0.74 times more return on investment than Woorim Machinery. However, Solution Advanced Technology is 1.34 times less risky than Woorim Machinery. It trades about 0.09 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about -0.07 per unit of risk. If you would invest 136,900 in Solution Advanced Technology on September 13, 2024 and sell it today you would earn a total of 8,100 from holding Solution Advanced Technology or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Woorim Machinery Co
Performance |
| Timeline |
| Solution Advanced |
| Woorim Machinery |
Solution Advanced and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Woorim Machinery
The main advantage of trading using opposite Solution Advanced and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Woorim Machinery vs. LG Household Healthcare | Woorim Machinery vs. Dong A Steel Technology | Woorim Machinery vs. Orbitech Co | Woorim Machinery vs. Choil Aluminum |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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