Correlation Between Woori Financial and Aurora World
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Aurora World 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 Aurora World 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 Aurora World, you can compare the effects of market volatilities on Woori Financial and Aurora World 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 Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Aurora World.
Diversification Opportunities for Woori Financial and Aurora World
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and Aurora is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World 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 Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of Woori Financial i.e., Woori Financial and Aurora World go up and down completely randomly.
Pair Corralation between Woori Financial and Aurora World
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 1.19 times more return on investment than Aurora World. However, Woori Financial is 1.19 times more volatile than Aurora World. It trades about 0.08 of its potential returns per unit of risk. Aurora World is currently generating about -0.03 per unit of risk. If you would invest 1,059,011 in Woori Financial Group on September 12, 2024 and sell it today you would earn a total of 484,989 from holding Woori Financial Group or generate 45.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.71% |
| Values | Daily Returns |
Woori Financial Group vs. Aurora World
Performance |
| Timeline |
| Woori Financial Group |
| Aurora World |
Woori Financial and Aurora World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Aurora World
The main advantage of trading using opposite Woori Financial and Aurora World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Aurora World 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 Aurora World will offset losses from the drop in Aurora World's long position.| Woori Financial vs. DB Insurance Co | Woori Financial vs. Pureun Mutual Savings | Woori Financial vs. Shinhan Financial Group | Woori Financial vs. iNtRON Biotechnology |
| Aurora World vs. Ssangyong Information Communication | Aurora World vs. PJ Metal Co | Aurora World vs. CG Hi Tech | Aurora World vs. Korea Computer |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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