Correlation Between Korea Investment and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Korea Investment 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 Investment 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 Investment Holdings and Woori Financial Group, you can compare the effects of market volatilities on Korea Investment 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 Investment with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Woori Financial.
Diversification Opportunities for Korea Investment and Woori Financial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Korea and Woori is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings 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 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 Korea Investment Holdings 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 Investment i.e., Korea Investment and Woori Financial go up and down completely randomly.
Pair Corralation between Korea Investment and Woori Financial
Assuming the 90 days trading horizon Korea Investment Holdings is expected to under-perform the Woori Financial. In addition to that, Korea Investment is 1.12 times more volatile than Woori Financial Group. It trades about -0.09 of its total potential returns per unit of risk. Woori Financial Group is currently generating about -0.06 per unit of volatility. If you would invest 1,563,000 in Woori Financial Group on October 12, 2024 and sell it today you would lose (23,000) from holding Woori Financial Group or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Woori Financial Group
Performance |
| Timeline |
| Korea Investment Holdings |
| Woori Financial Group |
Korea Investment and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Woori Financial
The main advantage of trading using opposite Korea Investment and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment 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 Investment vs. KG Eco Technology | Korea Investment vs. Guyoung Technology Co | Korea Investment vs. BIT Computer Co | Korea Investment vs. Jeju Bank |
| Woori Financial vs. Korea Investment Holdings | Woori Financial vs. Woori Technology Investment | Woori Financial vs. EBEST Investment Securities | Woori Financial vs. Golden Bridge Investment |
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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