Correlation Between Woori Financial and LG Energy
Can any of the company-specific risk be diversified away by investing in both Woori Financial and LG Energy 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 LG Energy 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 LG Energy Solution, you can compare the effects of market volatilities on Woori Financial and LG Energy 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 LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and LG Energy.
Diversification Opportunities for Woori Financial and LG Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woori and 373220 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and LG Energy Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Energy Solution 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 LG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Energy Solution has no effect on the direction of Woori Financial i.e., Woori Financial and LG Energy go up and down completely randomly.
Pair Corralation between Woori Financial and LG Energy
Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.57 times more return on investment than LG Energy. However, Woori Financial Group is 1.75 times less risky than LG Energy. It trades about 0.0 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.03 per unit of risk. If you would invest 1,562,335 in Woori Financial Group on October 18, 2024 and sell it today you would lose (16,335) from holding Woori Financial Group or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. LG Energy Solution
Performance |
| Timeline |
| Woori Financial Group |
| LG Energy Solution |
Woori Financial and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and LG Energy
The main advantage of trading using opposite Woori Financial and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, LG Energy 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 LG Energy will offset losses from the drop in LG Energy's long position.| Woori Financial vs. System and Application | Woori Financial vs. Lotte Data Communication | Woori Financial vs. ECSTELECOM Co | Woori Financial vs. Korean Drug Co |
| LG Energy vs. KB Financial Group | LG Energy vs. Woori Financial Group | LG Energy vs. DB Financial Investment | LG Energy vs. PJ Metal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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