Correlation Between Walgreens Boots and Sungwoo Techron

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

By analyzing existing cross correlation between Walgreens Boots Alliance and Sungwoo Techron CoLtd, you can compare the effects of market volatilities on Walgreens Boots and Sungwoo Techron 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 Walgreens Boots with a short position of Sungwoo Techron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Sungwoo Techron.

Diversification Opportunities for Walgreens Boots and Sungwoo Techron

0.01

Correlation Coefficient

Walgreens Boots  Sungwoo Techron

Significant diversification

The 3 months correlation between Walgreens and Sungwoo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Sungwoo Techron CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Techron CoLtd and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with Sungwoo Techron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Techron CoLtd has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Sungwoo Techron go up and down completely randomly.

Pair Corralation between Walgreens Boots and Sungwoo Techron

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.06 times more return on investment than Sungwoo Techron. However, Walgreens Boots is 2.06 times more volatile than Sungwoo Techron CoLtd. It trades about 0.03 of its potential returns per unit of risk. Sungwoo Techron CoLtd is currently generating about -0.04 per unit of risk. If you would invest  944.00  in Walgreens Boots Alliance on September 22, 2024 and sell it today you would earn a total of  11.00  from holding Walgreens Boots Alliance or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.56%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Sungwoo Techron CoLtd

Walgreens Boots Alliance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Sungwoo Techron CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walgreens Boots and Sungwoo Techron

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

The idea behind Walgreens Boots Alliance and Sungwoo Techron CoLtd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.