Correlation Between MEDICOX and Woori Technology

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

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

Diversification Opportunities for MEDICOX and Woori Technology

0.68

Correlation Coefficient

MEDICOX  Woori Technology

Poor diversification

The 3 months correlation between MEDICOX and Woori is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MEDICOX Co 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 MEDICOX 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 MEDICOX 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 Inv has no effect on the direction of MEDICOX i.e., MEDICOX and Woori Technology go up and down completely randomly.

Pair Corralation between MEDICOX and Woori Technology

Assuming the 90 days trading horizon MEDICOX Co is expected to generate 2.85 times more return on investment than Woori Technology. However, MEDICOX is 2.85 times more volatile than Woori Technology Investment. It trades about 0.0 of its potential returns per unit of risk. Woori Technology Investment is currently generating about -0.05 per unit of risk. If you would invest  32,000  in MEDICOX Co on December 29, 2024 and sell it today you would lose (4,800) from holding MEDICOX Co or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

MEDICOX Co  vs.  Woori Technology Investment

MEDICOX

Risk-Adjusted Performance

Very Weak

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

Very Weak

Over the last 90 days Woori Technology Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MEDICOX and Woori Technology

The main advantage of trading using opposite MEDICOX and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICOX 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 MEDICOX Co 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.