Correlation Between Woori Financial and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Dongbu Insurance 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 Dongbu Insurance 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 Dongbu Insurance Co, you can compare the effects of market volatilities on Woori Financial and Dongbu Insurance 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 Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Dongbu Insurance.
Diversification Opportunities for Woori Financial and Dongbu Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woori and Dongbu is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance 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 Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Woori Financial i.e., Woori Financial and Dongbu Insurance go up and down completely randomly.
Pair Corralation between Woori Financial and Dongbu Insurance
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.23 times more return on investment than Dongbu Insurance. However, Woori Financial Group is 4.39 times less risky than Dongbu Insurance. It trades about 0.38 of its potential returns per unit of risk. Dongbu Insurance Co is currently generating about -0.08 per unit of risk. If you would invest 1,543,000 in Woori Financial Group on November 6, 2024 and sell it today you would earn a total of 67,000 from holding Woori Financial Group or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Dongbu Insurance Co
Performance |
| Timeline |
| Woori Financial Group |
| Dongbu Insurance |
Woori Financial and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Dongbu Insurance
The main advantage of trading using opposite Woori Financial and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Dongbu Insurance 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 Dongbu Insurance will offset losses from the drop in Dongbu Insurance's long position.| Woori Financial vs. Shinsegae Food | Woori Financial vs. Foodnamoo | Woori Financial vs. Nice Information Telecommunication | Woori Financial vs. Asiana Airlines |
| Dongbu Insurance vs. Korea Air Svc | Dongbu Insurance vs. T3 Entertainment Co | Dongbu Insurance vs. Cloud Air CoLtd | Dongbu Insurance vs. Tamul Multimedia Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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