Correlation Between Woorim Machinery and KT Hitel

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

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

Diversification Opportunities for Woorim Machinery and KT Hitel

0.11

Correlation Coefficient

Woorim Machinery  KT Hitel

Average diversification

The 3 months correlation between Woorim and 036030 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel and Woorim Machinery 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 Woorim Machinery Co are associated (or correlated) with KT Hitel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Hitel has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and KT Hitel go up and down completely randomly.

Pair Corralation between Woorim Machinery and KT Hitel

Assuming the 90 days trading horizon Woorim Machinery Co is expected to under-perform the KT Hitel. But the stock apears to be less risky and, when comparing its historical volatility, Woorim Machinery Co is 1.07 times less risky than KT Hitel. The stock trades about -0.07 of its potential returns per unit of risk. The KT Hitel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  384,500  in KT Hitel on September 4, 2024 and sell it today you would lose (10,000) from holding KT Hitel or give up 2.6% of portfolio value over 90 days.

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

Woorim Machinery Co  vs.  KT Hitel

Woorim Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woorim Machinery Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KT Hitel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Hitel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KT Hitel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Woorim Machinery and KT Hitel

The main advantage of trading using opposite Woorim Machinery and KT Hitel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, KT Hitel 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 KT Hitel will offset losses from the drop in KT Hitel's long position.

The idea behind Woorim Machinery Co and KT Hitel 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.