Correlation Between WISE ITech and Woori Technology

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

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

Diversification Opportunities for WISE ITech and Woori Technology

-0.73

Correlation Coefficient

WISE ITech  Woori Technology

Pay attention - limited upside

The 3 months correlation between WISE and Woori is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding WISE iTech 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 WISE ITech 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 WISE iTech 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 WISE ITech i.e., WISE ITech and Woori Technology go up and down completely randomly.

Pair Corralation between WISE ITech and Woori Technology

Assuming the 90 days trading horizon WISE iTech Co is expected to generate 2.54 times more return on investment than Woori Technology. However, WISE ITech is 2.54 times more volatile than Woori Technology Investment. It trades about 0.12 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  559,000  in WISE iTech Co on December 30, 2024 and sell it today you would earn a total of  221,000  from holding WISE iTech Co or generate 39.53% return on investment over 90 days.

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

WISE iTech Co  vs.  Woori Technology Investment

WISE iTech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WISE iTech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WISE ITech sustained solid returns over the last few months and may actually be approaching a breakup point.

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 WISE ITech and Woori Technology

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

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.