Correlation Between Woori Financial and LG Household
Can any of the company-specific risk be diversified away by investing in both Woori Financial and LG Household 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 Household 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 Household Healthcare, you can compare the effects of market volatilities on Woori Financial and LG Household 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 Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and LG Household.
Diversification Opportunities for Woori Financial and LG Household
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and 051900 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare 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 Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Woori Financial i.e., Woori Financial and LG Household go up and down completely randomly.
Pair Corralation between Woori Financial and LG Household
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.63 times more return on investment than LG Household. However, Woori Financial Group is 1.58 times less risky than LG Household. It trades about 0.06 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.05 per unit of risk. If you would invest 1,026,073 in Woori Financial Group on September 24, 2024 and sell it today you would earn a total of 538,927 from holding Woori Financial Group or generate 52.52% 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. LG Household Healthcare
Performance |
| Timeline |
| Woori Financial Group |
| LG Household Healthcare |
Woori Financial and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and LG Household
The main advantage of trading using opposite Woori Financial and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. Hana Financial | Woori Financial vs. KakaoBank Corp | Woori Financial vs. Industrial Bank |
| LG Household vs. Woori Financial Group | LG Household vs. Jb Financial | LG Household vs. Nh Investment And | LG Household vs. Kumho Petro Chemical |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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