Correlation Between Korea Environment and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Korea Environment 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 Korea Environment and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Environment Technology and Woori Financial Group, you can compare the effects of market volatilities on Korea Environment 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 Korea Environment with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Environment and Woori Financial.
Diversification Opportunities for Korea Environment and Woori Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Woori is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Korea Environment Technology 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 Korea Environment 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 Korea Environment Technology 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 Korea Environment i.e., Korea Environment and Woori Financial go up and down completely randomly.
Pair Corralation between Korea Environment and Woori Financial
Assuming the 90 days trading horizon Korea Environment Technology is expected to generate 0.62 times more return on investment than Woori Financial. However, Korea Environment Technology is 1.61 times less risky than Woori Financial. It trades about 0.18 of its potential returns per unit of risk. Woori Financial Group is currently generating about -0.09 per unit of risk. If you would invest 830,490 in Korea Environment Technology on October 28, 2024 and sell it today you would earn a total of 57,510 from holding Korea Environment Technology or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Environment Technology vs. Woori Financial Group
Performance |
| Timeline |
| Korea Environment |
| Woori Financial Group |
Korea Environment and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Environment and Woori Financial
The main advantage of trading using opposite Korea Environment and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Environment 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.| Korea Environment vs. Samsung Electronics Co | Korea Environment vs. Samsung Electronics Co | Korea Environment vs. KB Financial Group | Korea Environment vs. Shinhan Financial Group |
| Woori Financial vs. Jin Air Co | Woori Financial vs. Atinum Investment Co | Woori Financial vs. NH Investment Securities | Woori Financial vs. E Investment Development |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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