Correlation Between Woori Financial and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Woori Financial and SK Chemicals 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 SK Chemicals 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 SK Chemicals Co, you can compare the effects of market volatilities on Woori Financial and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and SK Chemicals.
Diversification Opportunities for Woori Financial and SK Chemicals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and 285130 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Woori Financial i.e., Woori Financial and SK Chemicals go up and down completely randomly.
Pair Corralation between Woori Financial and SK Chemicals
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.41 times more return on investment than SK Chemicals. However, Woori Financial Group is 2.41 times less risky than SK Chemicals. It trades about 0.31 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.31 per unit of risk. If you would invest 1,581,000 in Woori Financial Group on September 3, 2024 and sell it today you would earn a total of 90,000 from holding Woori Financial Group or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. SK Chemicals Co
Performance |
| Timeline |
| Woori Financial Group |
| SK Chemicals |
Woori Financial and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and SK Chemicals
The main advantage of trading using opposite Woori Financial and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Woori Financial vs. Finebesteel | Woori Financial vs. Shin Steel Co | Woori Financial vs. Fine Besteel Co | Woori Financial vs. Hanil Iron Steel |
| SK Chemicals vs. LG Chemicals | SK Chemicals vs. POSCO Holdings | SK Chemicals vs. Hanwha Solutions | SK Chemicals vs. Lotte Chemical Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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