Correlation Between Woori Financial and Korea Gas
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Korea Gas 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 Gas 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 Gas, you can compare the effects of market volatilities on Woori Financial and Korea Gas 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 Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Korea Gas.
Diversification Opportunities for Woori Financial and Korea Gas
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Korea is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of Woori Financial i.e., Woori Financial and Korea Gas go up and down completely randomly.
Pair Corralation between Woori Financial and Korea Gas
Assuming the 90 days trading horizon Woori Financial is expected to generate 1.21 times less return on investment than Korea Gas. But when comparing it to its historical volatility, Woori Financial Group is 2.01 times less risky than Korea Gas. It trades about 0.07 of its potential returns per unit of risk. Korea Gas is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,116,965 in Korea Gas on August 27, 2024 and sell it today you would earn a total of 1,518,035 from holding Korea Gas or generate 48.7% 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 Gas
Performance |
| Timeline |
| Woori Financial Group |
| Korea Gas |
Woori Financial and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Korea Gas
The main advantage of trading using opposite Woori Financial and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Korea Gas 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 Gas will offset losses from the drop in Korea Gas' long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. Hana Financial | Woori Financial vs. KakaoBank Corp | Woori Financial vs. Industrial Bank |
| Korea Gas vs. KB Financial Group | Korea Gas vs. Shinhan Financial Group | Korea Gas vs. Hana Financial | Korea Gas vs. Woori 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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