Correlation Between Worldex Industry and Woori Technology

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

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

Diversification Opportunities for Worldex Industry and Woori Technology

-0.21

Correlation Coefficient

Worldex Industry  Woori Technology

Very good diversification

The 3 months correlation between Worldex and Woori is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Worldex Industry Trading 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 Worldex Industry 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 Worldex Industry Trading 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 Worldex Industry i.e., Worldex Industry and Woori Technology go up and down completely randomly.

Pair Corralation between Worldex Industry and Woori Technology

Assuming the 90 days trading horizon Worldex Industry Trading is expected to generate 0.51 times more return on investment than Woori Technology. However, Worldex Industry Trading is 1.95 times less risky than Woori Technology. It trades about -0.11 of its potential returns per unit of risk. Woori Technology Investment is currently generating about -0.08 per unit of risk. If you would invest  1,925,950  in Worldex Industry Trading on October 6, 2024 and sell it today you would lose (217,950) from holding Worldex Industry Trading or give up 11.32% of portfolio value over 90 days.

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

Worldex Industry Trading  vs.  Woori Technology Investment

Worldex Industry Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldex Industry Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Worldex Industry and Woori Technology

The main advantage of trading using opposite Worldex Industry and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldex Industry 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 Worldex Industry Trading 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.