Correlation Between Woori Financial and Korea Industrial
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Korea Industrial 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 Korea Industrial 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 Korea Industrial Co, you can compare the effects of market volatilities on Woori Financial and Korea Industrial 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 Korea Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Korea Industrial.
Diversification Opportunities for Woori Financial and Korea Industrial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woori and Korea is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Korea Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Industrial 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 Korea Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Industrial has no effect on the direction of Woori Financial i.e., Woori Financial and Korea Industrial go up and down completely randomly.
Pair Corralation between Woori Financial and Korea Industrial
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.53 times more return on investment than Korea Industrial. However, Woori Financial Group is 1.9 times less risky than Korea Industrial. It trades about 0.05 of its potential returns per unit of risk. Korea Industrial Co is currently generating about 0.01 per unit of risk. If you would invest 1,327,521 in Woori Financial Group on November 8, 2024 and sell it today you would earn a total of 235,479 from holding Woori Financial Group or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Korea Industrial Co
Performance |
| Timeline |
| Woori Financial Group |
| Korea Industrial |
Woori Financial and Korea Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Korea Industrial
The main advantage of trading using opposite Woori Financial and Korea Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Korea Industrial 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 Korea Industrial will offset losses from the drop in Korea Industrial's long position.| Woori Financial vs. WONIK Materials CoLtd | Woori Financial vs. Korean Drug Co | Woori Financial vs. PJ Metal Co | Woori Financial vs. National Plastic Co |
| Korea Industrial vs. Echomarketing CoLtd | Korea Industrial vs. Chorokbaem Healthcare Co | Korea Industrial vs. Dongbang Transport Logistics | Korea Industrial vs. Mobileleader CoLtd |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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