Correlation Between Woori Financial and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Finebesteel 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 Finebesteel 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 Finebesteel, you can compare the effects of market volatilities on Woori Financial and Finebesteel 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 Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Finebesteel.
Diversification Opportunities for Woori Financial and Finebesteel
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woori and Finebesteel is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Woori Financial i.e., Woori Financial and Finebesteel go up and down completely randomly.
Pair Corralation between Woori Financial and Finebesteel
Assuming the 90 days trading horizon Woori Financial is expected to generate 3.84 times less return on investment than Finebesteel. But when comparing it to its historical volatility, Woori Financial Group is 2.03 times less risky than Finebesteel. It trades about 0.05 of its potential returns per unit of risk. Finebesteel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 89,700 in Finebesteel on September 3, 2024 and sell it today you would earn a total of 15,000 from holding Finebesteel or generate 16.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Finebesteel
Performance |
| Timeline |
| Woori Financial Group |
| Finebesteel |
Woori Financial and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Finebesteel
The main advantage of trading using opposite Woori Financial and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.| Woori Financial vs. Finebesteel | Woori Financial vs. Shin Steel Co | Woori Financial vs. Fine Besteel Co | Woori Financial vs. Hanil Iron Steel |
| Finebesteel vs. Seah Steel Corp | Finebesteel vs. Ni Steel | Finebesteel vs. Korea Steel Co | Finebesteel vs. Bookook Steel |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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