Correlation Between Woori Financial and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy, you can compare the effects of market volatilities on Woori Financial and Namyang Dairy 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 Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Namyang Dairy.
Diversification Opportunities for Woori Financial and Namyang Dairy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Woori and Namyang is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy 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 Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Woori Financial i.e., Woori Financial and Namyang Dairy go up and down completely randomly.
Pair Corralation between Woori Financial and Namyang Dairy
Assuming the 90 days trading horizon Woori Financial is expected to generate 42.27 times less return on investment than Namyang Dairy. But when comparing it to its historical volatility, Woori Financial Group is 43.05 times less risky than Namyang Dairy. It trades about 0.08 of its potential returns per unit of risk. Namyang Dairy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,497,246 in Namyang Dairy on September 26, 2024 and sell it today you would earn a total of 1,332,754 from holding Namyang Dairy or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.67% |
| Values | Daily Returns |
Woori Financial Group vs. Namyang Dairy
Performance |
| Timeline |
| Woori Financial Group |
| Namyang Dairy |
Woori Financial and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Namyang Dairy
The main advantage of trading using opposite Woori Financial and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Woori Financial vs. Miwon Chemical | Woori Financial vs. Sangsangin Investment Securities | Woori Financial vs. SK Chemicals Co | Woori Financial vs. Youl Chon Chemical |
| Namyang Dairy vs. Woori Financial Group | Namyang Dairy vs. Jb Financial | Namyang Dairy vs. Nh Investment And | Namyang Dairy vs. Kumho Petro Chemical |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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