Correlation Between Woorim Machinery and DataSolution
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and DataSolution 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 DataSolution 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 DataSolution, you can compare the effects of market volatilities on Woorim Machinery and DataSolution 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 DataSolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and DataSolution.
Diversification Opportunities for Woorim Machinery and DataSolution
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woorim and DataSolution is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution 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 DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and DataSolution go up and down completely randomly.
Pair Corralation between Woorim Machinery and DataSolution
Assuming the 90 days trading horizon Woorim Machinery Co is expected to under-perform the DataSolution. But the stock apears to be less risky and, when comparing its historical volatility, Woorim Machinery Co is 1.29 times less risky than DataSolution. The stock trades about -0.06 of its potential returns per unit of risk. The DataSolution is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 418,000 in DataSolution on September 25, 2024 and sell it today you would earn a total of 35,000 from holding DataSolution or generate 8.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Woorim Machinery Co vs. DataSolution
Performance |
Timeline |
Woorim Machinery |
DataSolution |
Woorim Machinery and DataSolution Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woorim Machinery and DataSolution
The main advantage of trading using opposite Woorim Machinery and DataSolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, DataSolution 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 DataSolution will offset losses from the drop in DataSolution's long position.Woorim Machinery vs. Busan Industrial Co | Woorim Machinery vs. Busan Ind | Woorim Machinery vs. Mirae Asset Daewoo | Woorim Machinery vs. Shinhan WTI Futures |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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