Correlation Between Sungwoo Techron and Woori Technology

Can any of the company-specific risk be diversified away by investing in both Sungwoo Techron and Woori 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 Sungwoo Techron and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sungwoo Techron CoLtd and Woori Technology Investment, you can compare the effects of market volatilities on Sungwoo Techron and Woori 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 Sungwoo Techron with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungwoo Techron and Woori Technology.

Diversification Opportunities for Sungwoo Techron and Woori Technology

-0.5

Correlation Coefficient

Sungwoo Techron  Woori Technology

Very good diversification

The 3 months correlation between Sungwoo and Woori is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sungwoo Techron CoLtd and Woori Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology Inv and Sungwoo Techron 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 Sungwoo Techron CoLtd are associated (or correlated) with Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology Inv has no effect on the direction of Sungwoo Techron i.e., Sungwoo Techron and Woori Technology go up and down completely randomly.

Pair Corralation between Sungwoo Techron and Woori Technology

Assuming the 90 days trading horizon Sungwoo Techron CoLtd is expected to generate 0.47 times more return on investment than Woori Technology. However, Sungwoo Techron CoLtd is 2.11 times less risky than Woori Technology. It trades about 0.01 of its potential returns per unit of risk. Woori Technology Investment is currently generating about -0.14 per unit of risk. If you would invest  266,667  in Sungwoo Techron CoLtd on October 7, 2024 and sell it today you would lose (667.00) from holding Sungwoo Techron CoLtd or give up 0.25% of portfolio value over 90 days.

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

Sungwoo Techron CoLtd  vs.  Woori Technology Investment

Sungwoo Techron CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungwoo Techron CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sungwoo Techron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Sungwoo Techron and Woori Technology

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

The idea behind Sungwoo Techron CoLtd and Woori Technology Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.