Correlation Between Woori Technology and Wooyang

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

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

Diversification Opportunities for Woori Technology and Wooyang

-0.41

Correlation Coefficient

Woori Technology  Wooyang

Very good diversification

The 3 months correlation between Woori and Wooyang is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and Wooyang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wooyang 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 Wooyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wooyang has no effect on the direction of Woori Technology i.e., Woori Technology and Wooyang go up and down completely randomly.

Pair Corralation between Woori Technology and Wooyang

Assuming the 90 days trading horizon Woori Technology is expected to under-perform the Wooyang. But the stock apears to be less risky and, when comparing its historical volatility, Woori Technology is 1.39 times less risky than Wooyang. The stock trades about -0.03 of its potential returns per unit of risk. The Wooyang Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  303,000  in Wooyang Co on December 2, 2024 and sell it today you would earn a total of  4,500  from holding Wooyang Co or generate 1.49% return on investment over 90 days.

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

Woori Technology  vs.  Wooyang 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 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.

Wooyang

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wooyang Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wooyang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Woori Technology and Wooyang

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

The idea behind Woori Technology and Wooyang 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.