Correlation Between Woori Technology and Taekwang Ind

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

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

Diversification Opportunities for Woori Technology and Taekwang Ind

0.24

Correlation Coefficient

Woori Technology  Taekwang Ind

Modest diversification

The 3 months correlation between Woori and Taekwang is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and Taekwang Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taekwang Ind and Woori Technology 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 Woori Technology are associated (or correlated) with Taekwang Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taekwang Ind has no effect on the direction of Woori Technology i.e., Woori Technology and Taekwang Ind go up and down completely randomly.

Pair Corralation between Woori Technology and Taekwang Ind

Assuming the 90 days trading horizon Woori Technology is expected to under-perform the Taekwang Ind. In addition to that, Woori Technology is 1.97 times more volatile than Taekwang Ind. It trades about 0.0 of its total potential returns per unit of risk. Taekwang Ind is currently generating about 0.05 per unit of volatility. If you would invest  59,900,000  in Taekwang Ind on September 3, 2024 and sell it today you would earn a total of  2,500,000  from holding Taekwang Ind or generate 4.17% return on investment over 90 days.

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

Woori Technology  vs.  Taekwang Ind

Woori Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woori Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Woori Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Taekwang Ind

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taekwang Ind are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Taekwang Ind is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Woori Technology and Taekwang Ind

The main advantage of trading using opposite Woori Technology and Taekwang Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Taekwang Ind 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 Taekwang Ind will offset losses from the drop in Taekwang Ind's long position.

The idea behind Woori Technology and Taekwang Ind 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.