Correlation Between Woori Financial and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Nam Hwa 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 Nam Hwa 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 Nam Hwa Construction, you can compare the effects of market volatilities on Woori Financial and Nam Hwa 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 Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Nam Hwa.
Diversification Opportunities for Woori Financial and Nam Hwa
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Woori and Nam is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction 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 Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Woori Financial i.e., Woori Financial and Nam Hwa go up and down completely randomly.
Pair Corralation between Woori Financial and Nam Hwa
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.65 times more return on investment than Nam Hwa. However, Woori Financial Group is 1.53 times less risky than Nam Hwa. It trades about -0.1 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.08 per unit of risk. If you would invest 1,589,000 in Woori Financial Group on October 14, 2024 and sell it today you would lose (39,000) from holding Woori Financial Group or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Nam Hwa Construction
Performance |
| Timeline |
| Woori Financial Group |
| Nam Hwa Construction |
Woori Financial and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Nam Hwa
The main advantage of trading using opposite Woori Financial and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Woori Financial vs. Ssangyong Materials Corp | Woori Financial vs. Green Cross Medical | Woori Financial vs. WONIK Materials CoLtd | Woori Financial vs. Union Materials Corp |
| Nam Hwa vs. Seohee Construction Co | Nam Hwa vs. SEOJEON ELECTRIC MACHINERY | Nam Hwa vs. Hanmi Semiconductor Co | Nam Hwa vs. Semyung Electric Machinery |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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