Correlation Between Woori Financial and Lotte Non
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Lotte Non 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 Woori Financial and Lotte Non into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Financial Group and Lotte Non Life Insurance, you can compare the effects of market volatilities on Woori Financial and Lotte Non 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 Woori Financial with a short position of Lotte Non. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Lotte Non.
Diversification Opportunities for Woori Financial and Lotte Non
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Woori and Lotte is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life and Woori Financial 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 Woori Financial Group are associated (or correlated) with Lotte Non. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of Woori Financial i.e., Woori Financial and Lotte Non go up and down completely randomly.
Pair Corralation between Woori Financial and Lotte Non
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.52 times more return on investment than Lotte Non. However, Woori Financial Group is 1.93 times less risky than Lotte Non. It trades about 0.44 of its potential returns per unit of risk. Lotte Non Life Insurance is currently generating about -0.16 per unit of risk. If you would invest 1,526,000 in Woori Financial Group on November 4, 2024 and sell it today you would earn a total of 84,000 from holding Woori Financial Group or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Lotte Non Life Insurance
Performance |
| Timeline |
| Woori Financial Group |
| Lotte Non Life |
Woori Financial and Lotte Non Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Lotte Non
The main advantage of trading using opposite Woori Financial and Lotte Non positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Lotte Non 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 Lotte Non will offset losses from the drop in Lotte Non's long position.| Woori Financial vs. ENF Technology Co | Woori Financial vs. FoodNamoo | Woori Financial vs. Sempio Foods Co | Woori Financial vs. Bosung Power Technology |
| Lotte Non vs. Korean Reinsurance Co | Lotte Non vs. Barunson Entertainment Arts | Lotte Non vs. ChipsMedia | Lotte Non vs. Hanwha Life Insurance |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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