Correlation Between Han Kook and Woori Technology

Can any of the company-specific risk be diversified away by investing in both Han Kook 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 Han Kook and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Han Kook Steel and Woori Technology Investment, you can compare the effects of market volatilities on Han Kook 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 Han Kook with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Woori Technology.

Diversification Opportunities for Han Kook and Woori Technology

0.63

Correlation Coefficient

Han Kook  Woori Technology

Poor diversification

The 3 months correlation between Han and Woori is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel 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 Han Kook 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 Han Kook Steel 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 Han Kook i.e., Han Kook and Woori Technology go up and down completely randomly.

Pair Corralation between Han Kook and Woori Technology

Assuming the 90 days trading horizon Han Kook Steel is expected to generate 0.45 times more return on investment than Woori Technology. However, Han Kook Steel is 2.24 times less risky than Woori Technology. It trades about -0.12 of its potential returns per unit of risk. Woori Technology Investment is currently generating about -0.08 per unit of risk. If you would invest  188,700  in Han Kook Steel on December 31, 2024 and sell it today you would lose (15,600) from holding Han Kook Steel or give up 8.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Han Kook Steel  vs.  Woori Technology Investment

Han Kook Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Han Kook Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Woori Technology Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Woori Technology Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Han Kook and Woori Technology

The main advantage of trading using opposite Han Kook and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook 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.

The idea behind Han Kook Steel and Woori Technology Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.