Correlation Between KMH Hitech and Woori Technology
Can any of the company-specific risk be diversified away by investing in both KMH Hitech 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 KMH Hitech and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KMH Hitech Co and Woori Technology, you can compare the effects of market volatilities on KMH Hitech 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 KMH Hitech with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Woori Technology.
Diversification Opportunities for KMH Hitech and Woori Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KMH and Woori is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and KMH Hitech 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 KMH Hitech 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 KMH Hitech i.e., KMH Hitech and Woori Technology go up and down completely randomly.
Pair Corralation between KMH Hitech and Woori Technology
Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.84 times less return on investment than Woori Technology. But when comparing it to its historical volatility, KMH Hitech Co is 1.67 times less risky than Woori Technology. It trades about 0.06 of its potential returns per unit of risk. Woori Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 166,600 in Woori Technology on December 30, 2024 and sell it today you would earn a total of 15,300 from holding Woori Technology or generate 9.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
KMH Hitech Co vs. Woori Technology
Performance |
Timeline |
KMH Hitech |
Woori Technology |
KMH Hitech and Woori Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KMH Hitech and Woori Technology
The main advantage of trading using opposite KMH Hitech and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech 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.KMH Hitech vs. DataSolution | KMH Hitech vs. Aekyung Petrochemical Co | KMH Hitech vs. Tae Kyung Chemical | KMH Hitech vs. Lotte Data Communication |
Woori Technology vs. SBI Investment KOREA | Woori Technology vs. Hanwha Chemical Corp | Woori Technology vs. Lotte Rental Co | Woori Technology vs. Kukdo Chemical Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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