Correlation Between SBI Investment and Woori Technology
Can any of the company-specific risk be diversified away by investing in both SBI Investment 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 SBI Investment and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and Woori Technology, you can compare the effects of market volatilities on SBI Investment 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 SBI Investment with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Woori Technology.
Diversification Opportunities for SBI Investment and Woori Technology
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and Woori is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and SBI Investment 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 SBI Investment KOREA 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 has no effect on the direction of SBI Investment i.e., SBI Investment and Woori Technology go up and down completely randomly.
Pair Corralation between SBI Investment and Woori Technology
Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 1.41 times more return on investment than Woori Technology. However, SBI Investment is 1.41 times more volatile than Woori Technology. It trades about 0.09 of its potential returns per unit of risk. Woori Technology is currently generating about -0.34 per unit of risk. If you would invest 70,300 in SBI Investment KOREA on September 12, 2024 and sell it today you would earn a total of 5,600 from holding SBI Investment KOREA or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. Woori Technology
Performance |
| Timeline |
| SBI Investment KOREA |
| Woori Technology |
SBI Investment and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and Woori Technology
The main advantage of trading using opposite SBI Investment and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment 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.| SBI Investment vs. KB Financial Group | SBI Investment vs. Shinhan Financial Group | SBI Investment vs. Hana Financial | SBI Investment vs. Woori Financial Group |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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