Correlation Between Woori Technology and POSCO M

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

By analyzing existing cross correlation between Woori Technology and POSCO M TECH Co, you can compare the effects of market volatilities on Woori Technology and POSCO M 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 POSCO M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and POSCO M.

Diversification Opportunities for Woori Technology and POSCO M

0.65

Correlation Coefficient

Woori Technology  POSCO M

Poor diversification

The 3 months correlation between Woori and POSCO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and POSCO M TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO M TECH 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 POSCO M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO M TECH has no effect on the direction of Woori Technology i.e., Woori Technology and POSCO M go up and down completely randomly.

Pair Corralation between Woori Technology and POSCO M

Assuming the 90 days trading horizon Woori Technology is expected to under-perform the POSCO M. In addition to that, Woori Technology is 1.18 times more volatile than POSCO M TECH Co. It trades about -0.06 of its total potential returns per unit of risk. POSCO M TECH Co is currently generating about -0.06 per unit of volatility. If you would invest  1,389,000  in POSCO M TECH Co on November 19, 2024 and sell it today you would lose (152,000) from holding POSCO M TECH Co or give up 10.94% of portfolio value over 90 days.

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

Woori Technology  vs.  POSCO M TECH Co

Woori Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Woori Technology 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.

POSCO M TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days POSCO M TECH Co 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.

Pair Trading with Woori Technology and POSCO M

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

The idea behind Woori Technology and POSCO M TECH Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.