Correlation Between Daejung Chemicals and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Woori Financial Group, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Woori Financial.
Diversification Opportunities for Daejung Chemicals and Woori Financial
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejung and Woori is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals 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 Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and Woori Financial go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Woori Financial
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.84 times more return on investment than Woori Financial. However, Daejung Chemicals Metals is 1.19 times less risky than Woori Financial. It trades about 0.2 of its potential returns per unit of risk. Woori Financial Group is currently generating about -0.1 per unit of risk. If you would invest 1,267,068 in Daejung Chemicals Metals on October 14, 2024 and sell it today you would earn a total of 49,932 from holding Daejung Chemicals Metals or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Woori Financial Group
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Woori Financial Group |
Daejung Chemicals and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Woori Financial
The main advantage of trading using opposite Daejung Chemicals and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. Keyang Electric Machinery | Daejung Chemicals vs. Playgram Co | Daejung Chemicals vs. Seoam Machinery Industry | Daejung Chemicals vs. Woorim Machinery Co |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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