Correlation Between Innodep and Woori Technology

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

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

Diversification Opportunities for Innodep and Woori Technology

-0.71

Correlation Coefficient

Innodep  Woori Technology

Pay attention - limited upside

The 3 months correlation between Innodep and Woori is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Innodep 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 Innodep 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 Innodep 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 Innodep i.e., Innodep and Woori Technology go up and down completely randomly.

Pair Corralation between Innodep and Woori Technology

Assuming the 90 days trading horizon Innodep is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, Innodep is 1.95 times less risky than Woori Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Woori Technology Investment is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  665,000  in Woori Technology Investment on September 5, 2024 and sell it today you would earn a total of  323,000  from holding Woori Technology Investment or generate 48.57% return on investment over 90 days.

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

Innodep  vs.  Woori Technology Investment

Innodep

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innodep 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.

Woori Technology Inv

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Woori Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innodep and Woori Technology

The main advantage of trading using opposite Innodep and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innodep 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 Innodep 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.