Correlation Between Union Materials and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Union Materials 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 Union Materials and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and Woori Financial Group, you can compare the effects of market volatilities on Union Materials 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 Union Materials with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Woori Financial.
Diversification Opportunities for Union Materials and Woori Financial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and Woori is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp 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 Union Materials 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 Union Materials Corp 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 Union Materials i.e., Union Materials and Woori Financial go up and down completely randomly.
Pair Corralation between Union Materials and Woori Financial
Assuming the 90 days trading horizon Union Materials Corp is expected to generate 1.89 times more return on investment than Woori Financial. However, Union Materials is 1.89 times more volatile than Woori Financial Group. It trades about 0.04 of its potential returns per unit of risk. Woori Financial Group is currently generating about -0.06 per unit of risk. If you would invest 228,500 in Union Materials Corp on October 14, 2024 and sell it today you would earn a total of 13,500 from holding Union Materials Corp or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Woori Financial Group
Performance |
| Timeline |
| Union Materials Corp |
| Woori Financial Group |
Union Materials and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Woori Financial
The main advantage of trading using opposite Union Materials and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials 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.| Union Materials vs. Asia Technology Co | Union Materials vs. Guyoung Technology Co | Union Materials vs. PJ Metal Co | Union Materials vs. Dong A Steel Technology |
| Woori Financial vs. Ssangyong Materials Corp | Woori Financial vs. Green Cross Medical | Woori Financial vs. WONIK Materials CoLtd | Woori Financial vs. Union Materials Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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| Fundamental Analysis View fundamental data based on most recent published financial statements |