Correlation Between Woori Technology and Korea Air

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

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

Diversification Opportunities for Woori Technology and Korea Air

0.0

Correlation Coefficient

Woori Technology  Korea Air

Pay attention - limited upside

The 3 months correlation between Woori and Korea is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc 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 Investment are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Woori Technology i.e., Woori Technology and Korea Air go up and down completely randomly.

Pair Corralation between Woori Technology and Korea Air

Assuming the 90 days trading horizon Woori Technology is expected to generate 1.12 times less return on investment than Korea Air. In addition to that, Woori Technology is 1.68 times more volatile than Korea Air Svc. It trades about 0.02 of its total potential returns per unit of risk. Korea Air Svc is currently generating about 0.04 per unit of volatility. If you would invest  5,350,000  in Korea Air Svc on October 5, 2024 and sell it today you would earn a total of  230,000  from holding Korea Air Svc or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Woori Technology Investment  vs.  Korea Air Svc

Woori Technology Inv

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Korea Air Svc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Air Svc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Woori Technology and Korea Air

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

The idea behind Woori Technology Investment and Korea Air Svc 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.