Correlation Between Woori Financial and Newtree CoLtd
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Newtree CoLtd 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 Newtree CoLtd 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 Newtree CoLtd, you can compare the effects of market volatilities on Woori Financial and Newtree CoLtd 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 Newtree CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Newtree CoLtd.
Diversification Opportunities for Woori Financial and Newtree CoLtd
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woori and Newtree is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Newtree CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtree CoLtd 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 Newtree CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtree CoLtd has no effect on the direction of Woori Financial i.e., Woori Financial and Newtree CoLtd go up and down completely randomly.
Pair Corralation between Woori Financial and Newtree CoLtd
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.17 times more return on investment than Newtree CoLtd. However, Woori Financial Group is 5.85 times less risky than Newtree CoLtd. It trades about 0.36 of its potential returns per unit of risk. Newtree CoLtd is currently generating about -0.34 per unit of risk. If you would invest 1,581,000 in Woori Financial Group on September 4, 2024 and sell it today you would earn a total of 114,000 from holding Woori Financial Group or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. Newtree CoLtd
Performance |
| Timeline |
| Woori Financial Group |
| Newtree CoLtd |
Woori Financial and Newtree CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Newtree CoLtd
The main advantage of trading using opposite Woori Financial and Newtree CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Newtree CoLtd 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 Newtree CoLtd will offset losses from the drop in Newtree CoLtd's long position.| Woori Financial vs. Orbitech Co | Woori Financial vs. Cots Technology Co | Woori Financial vs. QUALITAS SEMICONDUCTOR LTD | Woori Financial vs. Hankukpackage Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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