Correlation Between Woori Financial and KCC
Can any of the company-specific risk be diversified away by investing in both Woori Financial and KCC 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 KCC 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 KCC Corporation, you can compare the effects of market volatilities on Woori Financial and KCC 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 KCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and KCC.
Diversification Opportunities for Woori Financial and KCC
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woori and KCC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and KCC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Corporation 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 KCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Corporation has no effect on the direction of Woori Financial i.e., Woori Financial and KCC go up and down completely randomly.
Pair Corralation between Woori Financial and KCC
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.79 times more return on investment than KCC. However, Woori Financial Group is 1.26 times less risky than KCC. It trades about 0.11 of its potential returns per unit of risk. KCC Corporation is currently generating about -0.24 per unit of risk. If you would invest 1,559,000 in Woori Financial Group on September 3, 2024 and sell it today you would earn a total of 112,000 from holding Woori Financial Group or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. KCC Corp.
Performance |
| Timeline |
| Woori Financial Group |
| KCC Corporation |
Woori Financial and KCC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and KCC
The main advantage of trading using opposite Woori Financial and KCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, KCC 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 KCC will offset losses from the drop in KCC's long position.| Woori Financial vs. Finebesteel | Woori Financial vs. Shin Steel Co | Woori Financial vs. Fine Besteel Co | Woori Financial vs. Hanil Iron Steel |
| KCC vs. Daejung Chemicals Metals | KCC vs. Heungkuk Metaltech CoLtd | KCC vs. Kbi Metal Co | KCC vs. Hanjoo Light Metal |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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