Correlation Between Hankook Furniture and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture 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 Hankook Furniture and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hankook Furniture Co and Woori Financial Group, you can compare the effects of market volatilities on Hankook Furniture 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 Hankook Furniture with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Woori Financial.
Diversification Opportunities for Hankook Furniture and Woori Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hankook and Woori is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture 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 Hankook Furniture 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 Hankook Furniture 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 Hankook Furniture i.e., Hankook Furniture and Woori Financial go up and down completely randomly.
Pair Corralation between Hankook Furniture and Woori Financial
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.95 times more return on investment than Woori Financial. However, Hankook Furniture Co is 1.05 times less risky than Woori Financial. It trades about 0.14 of its potential returns per unit of risk. Woori Financial Group is currently generating about -0.05 per unit of risk. If you would invest 356,821 in Hankook Furniture Co on October 24, 2024 and sell it today you would earn a total of 46,679 from holding Hankook Furniture Co or generate 13.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hankook Furniture Co vs. Woori Financial Group
Performance |
Timeline |
Hankook Furniture |
Woori Financial Group |
Hankook Furniture and Woori Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hankook Furniture and Woori Financial
The main advantage of trading using opposite Hankook Furniture and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture 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.Hankook Furniture vs. Kukdong Oil Chemicals | Hankook Furniture vs. Green Cross Medical | Hankook Furniture vs. Tae Kyung Chemical | Hankook Furniture vs. Daejung Chemicals Metals |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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