Correlation Between Woori Financial and KB Financial
Can any of the company-specific risk be diversified away by investing in both Woori Financial and KB Financial 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 KB Financial 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 KB Financial Group, you can compare the effects of market volatilities on Woori Financial and KB Financial 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 KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and KB Financial.
Diversification Opportunities for Woori Financial and KB Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and KB Financial is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group 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 KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Woori Financial i.e., Woori Financial and KB Financial go up and down completely randomly.
Pair Corralation between Woori Financial and KB Financial
Allowing for the 90-day total investment horizon Woori Financial Group is expected to under-perform the KB Financial. In addition to that, Woori Financial is 1.2 times more volatile than KB Financial Group. It trades about -0.06 of its total potential returns per unit of risk. KB Financial Group is currently generating about -0.06 per unit of volatility. If you would invest 5,432 in KB Financial Group on December 30, 2024 and sell it today you would lose (96.00) from holding KB Financial Group or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. KB Financial Group
Performance |
| Timeline |
| Woori Financial Group |
| KB Financial Group |
Woori Financial and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and KB Financial
The main advantage of trading using opposite Woori Financial and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.| Woori Financial vs. Shinhan Financial Group | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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