Correlation Between Woori Financial and HSD Engine
Can any of the company-specific risk be diversified away by investing in both Woori Financial and HSD Engine 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 HSD Engine 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 HSD Engine Co, you can compare the effects of market volatilities on Woori Financial and HSD Engine 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 HSD Engine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and HSD Engine.
Diversification Opportunities for Woori Financial and HSD Engine
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and HSD is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and HSD Engine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSD Engine 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 HSD Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSD Engine has no effect on the direction of Woori Financial i.e., Woori Financial and HSD Engine go up and down completely randomly.
Pair Corralation between Woori Financial and HSD Engine
Assuming the 90 days trading horizon Woori Financial is expected to generate 1.74 times less return on investment than HSD Engine. But when comparing it to its historical volatility, Woori Financial Group is 2.07 times less risky than HSD Engine. It trades about 0.09 of its potential returns per unit of risk. HSD Engine Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,217,000 in HSD Engine Co on September 2, 2024 and sell it today you would earn a total of 394,000 from holding HSD Engine Co or generate 32.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. HSD Engine Co
Performance |
| Timeline |
| Woori Financial Group |
| HSD Engine |
Woori Financial and HSD Engine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and HSD Engine
The main advantage of trading using opposite Woori Financial and HSD Engine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, HSD Engine 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 HSD Engine will offset losses from the drop in HSD Engine's long position.| Woori Financial vs. PJ Metal Co | Woori Financial vs. Samyung Trading Co | Woori Financial vs. NH Investment Securities | Woori Financial vs. LB Investment |
| HSD Engine vs. Korea New Network | HSD Engine vs. ICD Co | HSD Engine vs. DYPNF CoLtd | HSD Engine vs. Busan Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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