Correlation Between Industrial Bank and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Industrial Bank 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 Industrial Bank and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Woori Financial Group, you can compare the effects of market volatilities on Industrial Bank 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 Industrial Bank with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Woori Financial.
Diversification Opportunities for Industrial Bank and Woori Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and Woori is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank 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 Industrial Bank 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 Industrial Bank 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 Industrial Bank i.e., Industrial Bank and Woori Financial go up and down completely randomly.
Pair Corralation between Industrial Bank and Woori Financial
Assuming the 90 days trading horizon Industrial Bank is expected to generate 4.37 times less return on investment than Woori Financial. But when comparing it to its historical volatility, Industrial Bank is 1.18 times less risky than Woori Financial. It trades about 0.05 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,606,000 in Woori Financial Group on August 27, 2024 and sell it today you would earn a total of 79,000 from holding Woori Financial Group or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Woori Financial Group
Performance |
| Timeline |
| Industrial Bank |
| Woori Financial Group |
Industrial Bank and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Woori Financial
The main advantage of trading using opposite Industrial Bank and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank 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.| Industrial Bank vs. Haitai Confectionery Foods | Industrial Bank vs. Shinsegae Information Communication | Industrial Bank vs. SCI Information Service | Industrial Bank vs. Ssangyong Information Communication |
| Woori Financial vs. Automobile Pc | Woori Financial vs. Daishin Information Communications | Woori Financial vs. Pureun Mutual Savings | Woori Financial vs. Alton Sports CoLtd |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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