Correlation Between Woori Financial and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Woori Financial and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Woori Financial and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and SEOJEON ELECTRIC.
Diversification Opportunities for Woori Financial and SEOJEON ELECTRIC
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woori and SEOJEON is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC 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 SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Woori Financial i.e., Woori Financial and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Woori Financial and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Woori Financial is expected to generate 20.55 times less return on investment than SEOJEON ELECTRIC. But when comparing it to its historical volatility, Woori Financial Group is 2.41 times less risky than SEOJEON ELECTRIC. It trades about 0.04 of its potential returns per unit of risk. SEOJEON ELECTRIC MACHINERY is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 335,000 in SEOJEON ELECTRIC MACHINERY on October 9, 2024 and sell it today you would earn a total of 67,000 from holding SEOJEON ELECTRIC MACHINERY or generate 20.0% 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. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| Woori Financial Group |
| SEOJEON ELECTRIC MAC |
Woori Financial and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and SEOJEON ELECTRIC
The main advantage of trading using opposite Woori Financial and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.| Woori Financial vs. Sangsin Energy Display | Woori Financial vs. Korea Air Svc | Woori Financial vs. iNtRON Biotechnology | Woori Financial vs. HB Technology TD |
| SEOJEON ELECTRIC vs. Top Material Co | SEOJEON ELECTRIC vs. Korean Reinsurance Co | SEOJEON ELECTRIC vs. Union Materials Corp | SEOJEON ELECTRIC vs. LAKE MATERIALS LTD |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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