Correlation Between Woori Technology and Samsung Special

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

Diversification Opportunities for Woori Technology and Samsung Special

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Woori and Samsung is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Samsung Special Purpose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Special Purpose 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 Samsung Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Special Purpose has no effect on the direction of Woori Technology i.e., Woori Technology and Samsung Special go up and down completely randomly.

Pair Corralation between Woori Technology and Samsung Special

Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 1.28 times more return on investment than Samsung Special. However, Woori Technology is 1.28 times more volatile than Samsung Special Purpose. It trades about 0.17 of its potential returns per unit of risk. Samsung Special Purpose is currently generating about 0.04 per unit of risk. If you would invest  648,000  in Woori Technology Investment on September 6, 2024 and sell it today you would earn a total of  302,000  from holding Woori Technology Investment or generate 46.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Woori Technology Investment  vs.  Samsung Special Purpose

 Performance 
       Timeline  
Woori Technology Inv 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Woori Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
Samsung Special Purpose 

Risk-Adjusted Performance

3 of 100

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

Woori Technology and Samsung Special Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Woori Technology and Samsung Special

The main advantage of trading using opposite Woori Technology and Samsung Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Samsung Special 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 Samsung Special will offset losses from the drop in Samsung Special's long position.
The idea behind Woori Technology Investment and Samsung Special Purpose 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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