Correlation Between Songwon Industrial and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Woori Financial 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 Songwon Industrial and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Woori Financial Group, you can compare the effects of market volatilities on Songwon Industrial and Woori Financial 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 Songwon Industrial with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Woori Financial.
Diversification Opportunities for Songwon Industrial and Woori Financial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Songwon and Woori is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group and Songwon Industrial 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 Songwon Industrial Co are associated (or correlated) with Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Woori Financial go up and down completely randomly.
Pair Corralation between Songwon Industrial and Woori Financial
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 1.29 times more return on investment than Woori Financial. However, Songwon Industrial is 1.29 times more volatile than Woori Financial Group. It trades about 0.1 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.01 per unit of risk. If you would invest 1,074,000 in Songwon Industrial Co on September 15, 2024 and sell it today you would earn a total of 52,000 from holding Songwon Industrial Co or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Woori Financial Group
Performance |
| Timeline |
| Songwon Industrial |
| Woori Financial Group |
Songwon Industrial and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Woori Financial
The main advantage of trading using opposite Songwon Industrial and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Woori Financial 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 Financial will offset losses from the drop in Woori Financial's long position.| Songwon Industrial vs. Samsung Electronics Co | Songwon Industrial vs. Samsung Electronics Co | Songwon Industrial vs. SK Hynix | Songwon Industrial vs. POSCO Holdings |
| Woori Financial vs. Cheryong Industrial CoLtd | Woori Financial vs. Kbi Metal Co | Woori Financial vs. Songwon Industrial Co | Woori Financial vs. LEENO Industrial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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