Correlation Between Woori Technology and Aurora World

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

Diversification Opportunities for Woori Technology and Aurora World

0.31

Correlation Coefficient

Woori Technology  Aurora World

Weak diversification

The 3 months correlation between Woori and Aurora is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World 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 Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of Woori Technology i.e., Woori Technology and Aurora World go up and down completely randomly.

Pair Corralation between Woori Technology and Aurora World

Assuming the 90 days trading horizon Woori Technology Investment is expected to under-perform the Aurora World. In addition to that, Woori Technology is 2.58 times more volatile than Aurora World. It trades about -0.29 of its total potential returns per unit of risk. Aurora World is currently generating about 0.05 per unit of volatility. If you would invest  600,000  in Aurora World on September 23, 2024 and sell it today you would earn a total of  10,000  from holding Aurora World or generate 1.67% return on investment over 90 days.

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

Woori Technology Investment  vs.  Aurora World

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.

Aurora World

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora World are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurora World sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Technology and Aurora World

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

The idea behind Woori Technology Investment and Aurora World 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.