Correlation Between Woori Technology and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Korea Petro 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 Petro 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 Petro Chemical, you can compare the effects of market volatilities on Woori Technology and Korea Petro 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 Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Korea Petro.
Diversification Opportunities for Woori Technology and Korea Petro
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Korea is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical 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 Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Woori Technology i.e., Woori Technology and Korea Petro go up and down completely randomly.
Pair Corralation between Woori Technology and Korea Petro
Assuming the 90 days trading horizon Woori Technology Investment is expected to under-perform the Korea Petro. In addition to that, Woori Technology is 1.01 times more volatile than Korea Petro Chemical. It trades about -0.21 of its total potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.09 per unit of volatility. If you would invest 8,930,000 in Korea Petro Chemical on September 20, 2024 and sell it today you would lose (880,000) from holding Korea Petro Chemical or give up 9.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Woori Technology Investment vs. Korea Petro Chemical
Performance |
Timeline |
Woori Technology Inv |
Korea Petro Chemical |
Woori Technology and Korea Petro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woori Technology and Korea Petro
The main advantage of trading using opposite Woori Technology and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Korea Petro 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 Petro will offset losses from the drop in Korea Petro's long position.Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group | Woori Technology vs. Hana Financial | Woori Technology vs. Woori Financial Group |
Korea Petro vs. LG Chemicals | Korea Petro vs. POSCO Holdings | Korea Petro vs. Hanwha Solutions | Korea Petro vs. Lotte Chemical Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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