Correlation Between Woori Financial and SBI Investment
Can any of the company-specific risk be diversified away by investing in both Woori Financial and SBI Investment 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 SBI Investment 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 SBI Investment KOREA, you can compare the effects of market volatilities on Woori Financial and SBI Investment 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 SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and SBI Investment.
Diversification Opportunities for Woori Financial and SBI Investment
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and SBI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA 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 SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Woori Financial i.e., Woori Financial and SBI Investment go up and down completely randomly.
Pair Corralation between Woori Financial and SBI Investment
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.7 times more return on investment than SBI Investment. However, Woori Financial Group is 1.42 times less risky than SBI Investment. It trades about 0.07 of its potential returns per unit of risk. SBI Investment KOREA is currently generating about -0.04 per unit of risk. If you would invest 1,060,581 in Woori Financial Group on August 24, 2024 and sell it today you would earn a total of 618,419 from holding Woori Financial Group or generate 58.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. SBI Investment KOREA
Performance |
| Timeline |
| Woori Financial Group |
| SBI Investment KOREA |
Woori Financial and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and SBI Investment
The main advantage of trading using opposite Woori Financial and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. Hana Financial | Woori Financial vs. KakaoBank Corp | Woori Financial vs. Industrial Bank |
| SBI Investment vs. Korea New Network | SBI Investment vs. Dong A Eltek | SBI Investment vs. Dreamus Company | SBI Investment vs. SK Bioscience 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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