Correlation Between Woori Financial and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on Woori Financial and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Woorim Machinery.
Diversification Opportunities for Woori Financial and Woorim Machinery
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woori and Woorim is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Woori Financial i.e., Woori Financial and Woorim Machinery go up and down completely randomly.
Pair Corralation between Woori Financial and Woorim Machinery
Assuming the 90 days trading horizon Woori Financial Group is expected to under-perform the Woorim Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Woori Financial Group is 5.52 times less risky than Woorim Machinery. The stock trades about 0.0 of its potential returns per unit of risk. The Woorim Machinery Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 478,000 in Woorim Machinery Co on October 24, 2024 and sell it today you would earn a total of 73,000 from holding Woorim Machinery Co or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Woorim Machinery Co
Performance |
| Timeline |
| Woori Financial Group |
| Woorim Machinery |
Woori Financial and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Woorim Machinery
The main advantage of trading using opposite Woori Financial and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Woori Financial vs. Hankook Furniture Co | Woori Financial vs. Shinsegae Food | Woori Financial vs. Dongbang Transport Logistics | Woori Financial vs. Organic Special Pet |
| Woorim Machinery vs. Korean Air Lines | Woorim Machinery vs. NH Investment Securities | Woorim Machinery vs. Duksan Hi Metal | Woorim Machinery vs. Daol Investment Securities |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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