Correlation Between Shin Steel and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Shin Steel 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 Shin Steel and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Steel Co and Woori Financial Group, you can compare the effects of market volatilities on Shin Steel 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 Shin Steel with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Steel and Woori Financial.
Diversification Opportunities for Shin Steel and Woori Financial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shin and Woori is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co 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 Shin Steel 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 Shin Steel Co 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 Shin Steel i.e., Shin Steel and Woori Financial go up and down completely randomly.
Pair Corralation between Shin Steel and Woori Financial
Assuming the 90 days trading horizon Shin Steel Co is expected to under-perform the Woori Financial. In addition to that, Shin Steel is 2.85 times more volatile than Woori Financial Group. It trades about -0.01 of its total potential returns per unit of risk. Woori Financial Group is currently generating about 0.07 per unit of volatility. If you would invest 1,064,723 in Woori Financial Group on September 3, 2024 and sell it today you would earn a total of 606,277 from holding Woori Financial Group or generate 56.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.34% |
| Values | Daily Returns |
Shin Steel Co vs. Woori Financial Group
Performance |
| Timeline |
| Shin Steel |
| Woori Financial Group |
Shin Steel and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Steel and Woori Financial
The main advantage of trading using opposite Shin Steel and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Steel 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.| Shin Steel vs. Samsung Electronics Co | Shin Steel vs. Samsung Electronics Co | Shin Steel vs. LG Energy Solution | Shin Steel vs. SK Hynix |
| Woori Financial vs. Finebesteel | Woori Financial vs. Shin Steel Co | Woori Financial vs. Fine Besteel Co | Woori Financial vs. Hanil Iron Steel |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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