Correlation Between Woori Financial and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Jeju Air 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 Jeju Air 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 Jeju Air Co, you can compare the effects of market volatilities on Woori Financial and Jeju Air 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 Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Jeju Air.
Diversification Opportunities for Woori Financial and Jeju Air
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and Jeju is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air 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 Jeju Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Air has no effect on the direction of Woori Financial i.e., Woori Financial and Jeju Air go up and down completely randomly.
Pair Corralation between Woori Financial and Jeju Air
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.99 times more return on investment than Jeju Air. However, Woori Financial Group is 1.01 times less risky than Jeju Air. It trades about 0.07 of its potential returns per unit of risk. Jeju Air Co is currently generating about -0.11 per unit of risk. If you would invest 1,165,043 in Woori Financial Group on November 9, 2024 and sell it today you would earn a total of 397,957 from holding Woori Financial Group or generate 34.16% 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. Jeju Air Co
Performance |
| Timeline |
| Woori Financial Group |
| Jeju Air |
Woori Financial and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Jeju Air
The main advantage of trading using opposite Woori Financial and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Jeju Air 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 Jeju Air will offset losses from the drop in Jeju Air's long position.| Woori Financial vs. TS Investment Corp | Woori Financial vs. DB Financial Investment | Woori Financial vs. Hironic Co | Woori Financial vs. Daechang Steel Co |
| Jeju Air vs. Daishin Information Communications | Jeju Air vs. Polaris Office Corp | Jeju Air vs. KB Financial Group | Jeju Air vs. Lotte Non Life Insurance |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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