Correlation Between Daewon Media and Woori Technology

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

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

Diversification Opportunities for Daewon Media and Woori Technology

0.53

Correlation Coefficient

Daewon Media  Woori Technology

Very weak diversification

The 3 months correlation between Daewon and Woori is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Media Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and Daewon Media 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 Daewon Media Co 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 has no effect on the direction of Daewon Media i.e., Daewon Media and Woori Technology go up and down completely randomly.

Pair Corralation between Daewon Media and Woori Technology

Assuming the 90 days trading horizon Daewon Media Co is expected to generate 0.92 times more return on investment than Woori Technology. However, Daewon Media Co is 1.08 times less risky than Woori Technology. It trades about 0.26 of its potential returns per unit of risk. Woori Technology is currently generating about 0.08 per unit of risk. If you would invest  775,779  in Daewon Media Co on December 23, 2024 and sell it today you would earn a total of  318,221  from holding Daewon Media Co or generate 41.02% return on investment over 90 days.

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

Daewon Media Co  vs.  Woori Technology

Daewon Media

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Daewon Media Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daewon Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Woori Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology are ranked lower than 6 (%) 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.

Pair Trading with Daewon Media and Woori Technology

The main advantage of trading using opposite Daewon Media and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Media 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 Daewon Media Co and Woori Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.