Correlation Between Woori Technology and Han Kook

Can any of the company-specific risk be diversified away by investing in both Woori Technology and Han Kook 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 Han Kook 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 Han Kook Capital, you can compare the effects of market volatilities on Woori Technology and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Han Kook.

Diversification Opportunities for Woori Technology and Han Kook

-0.47

Correlation Coefficient

Woori Technology  Han Kook

Very good diversification

The 3 months correlation between Woori and Han is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Woori Technology i.e., Woori Technology and Han Kook go up and down completely randomly.

Pair Corralation between Woori Technology and Han Kook

Assuming the 90 days trading horizon Woori Technology Investment is expected to under-perform the Han Kook. In addition to that, Woori Technology is 3.56 times more volatile than Han Kook Capital. It trades about -0.08 of its total potential returns per unit of risk. Han Kook Capital is currently generating about 0.06 per unit of volatility. If you would invest  53,480  in Han Kook Capital on October 6, 2024 and sell it today you would earn a total of  1,420  from holding Han Kook Capital or generate 2.66% 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 Investment  vs.  Han Kook Capital

Woori Technology Inv

Risk-Adjusted Performance

2 of 100

Weak

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

Han Kook Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Han Kook Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Han Kook 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 Han Kook

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

The idea behind Woori Technology Investment and Han Kook Capital 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.