Correlation Between Woori Financial and Korea Environment
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Korea Environment 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 Environment 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 Environment Technology, you can compare the effects of market volatilities on Woori Financial and Korea Environment 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 Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Korea Environment.
Diversification Opportunities for Woori Financial and Korea Environment
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Korea is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment 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 Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of Woori Financial i.e., Woori Financial and Korea Environment go up and down completely randomly.
Pair Corralation between Woori Financial and Korea Environment
Assuming the 90 days trading horizon Woori Financial Group is expected to under-perform the Korea Environment. In addition to that, Woori Financial is 1.61 times more volatile than Korea Environment Technology. It trades about -0.09 of its total potential returns per unit of risk. Korea Environment Technology is currently generating about 0.18 per unit of volatility. If you would invest 830,490 in Korea Environment Technology on October 28, 2024 and sell it today you would earn a total of 57,510 from holding Korea Environment Technology or generate 6.92% 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. Korea Environment Technology
Performance |
| Timeline |
| Woori Financial Group |
| Korea Environment |
Woori Financial and Korea Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Korea Environment
The main advantage of trading using opposite Woori Financial and Korea Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Korea Environment 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 Environment will offset losses from the drop in Korea Environment's long position.| Woori Financial vs. Jin Air Co | Woori Financial vs. Atinum Investment Co | Woori Financial vs. NH Investment Securities | Woori Financial vs. E Investment Development |
| Korea Environment vs. Samsung Electronics Co | Korea Environment vs. Samsung Electronics Co | Korea Environment vs. KB Financial Group | Korea Environment vs. Shinhan Financial Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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