Correlation Between Woori Technology and HB Technology

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

Diversification Opportunities for Woori Technology and HB Technology

-0.33

Correlation Coefficient

Woori Technology  HB Technology

Very good diversification

The 3 months correlation between Woori and 078150 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and HB Technology TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HB Technology TD 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 HB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HB Technology TD has no effect on the direction of Woori Technology i.e., Woori Technology and HB Technology go up and down completely randomly.

Pair Corralation between Woori Technology and HB Technology

Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 1.25 times more return on investment than HB Technology. However, Woori Technology is 1.25 times more volatile than HB Technology TD. It trades about 0.04 of its potential returns per unit of risk. HB Technology TD is currently generating about -0.02 per unit of risk. If you would invest  737,000  in Woori Technology Investment on October 13, 2024 and sell it today you would earn a total of  39,000  from holding Woori Technology Investment or generate 5.29% return on investment over 90 days.

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

Woori Technology Investment  vs.  HB Technology TD

Woori Technology Inv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology Investment are ranked lower than 3 (%) 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.

HB Technology TD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HB Technology TD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HB Technology 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 HB Technology

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

The idea behind Woori Technology Investment and HB Technology TD 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.