Correlation Between Woori Financial and LG Uplus
Can any of the company-specific risk be diversified away by investing in both Woori Financial and LG Uplus 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 LG Uplus 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 LG Uplus, you can compare the effects of market volatilities on Woori Financial and LG Uplus 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 LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and LG Uplus.
Diversification Opportunities for Woori Financial and LG Uplus
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Woori and 032640 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus 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 LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Woori Financial i.e., Woori Financial and LG Uplus go up and down completely randomly.
Pair Corralation between Woori Financial and LG Uplus
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.53 times more return on investment than LG Uplus. However, Woori Financial Group is 1.9 times less risky than LG Uplus. It trades about 0.03 of its potential returns per unit of risk. LG Uplus is currently generating about -0.44 per unit of risk. If you would invest 1,574,000 in Woori Financial Group on October 25, 2024 and sell it today you would earn a total of 6,000 from holding Woori Financial Group or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. LG Uplus
Performance |
| Timeline |
| Woori Financial Group |
| LG Uplus |
Woori Financial and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and LG Uplus
The main advantage of trading using opposite Woori Financial and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, LG Uplus 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 LG Uplus will offset losses from the drop in LG Uplus' long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. Hana Financial | Woori Financial vs. KakaoBank Corp | Woori Financial vs. Industrial Bank |
| LG Uplus vs. ABCO Electronics Co | LG Uplus vs. Kukil Metal Co | LG Uplus vs. Daejoo Electronic Materials | LG Uplus vs. SungMoon Electronics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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