Correlation Between Woori Financial and Parkland
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Parkland 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 Parkland 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 Parkland, you can compare the effects of market volatilities on Woori Financial and Parkland 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 Parkland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Parkland.
Diversification Opportunities for Woori Financial and Parkland
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and Parkland is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Parkland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland 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 Parkland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland has no effect on the direction of Woori Financial i.e., Woori Financial and Parkland go up and down completely randomly.
Pair Corralation between Woori Financial and Parkland
Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.78 times more return on investment than Parkland. However, Woori Financial Group is 1.29 times less risky than Parkland. It trades about 0.07 of its potential returns per unit of risk. Parkland is currently generating about 0.02 per unit of risk. If you would invest 2,429 in Woori Financial Group on August 31, 2024 and sell it today you would earn a total of 1,145 from holding Woori Financial Group or generate 47.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.24% |
| Values | Daily Returns |
Woori Financial Group vs. Parkland
Performance |
| Timeline |
| Woori Financial Group |
| Parkland |
Woori Financial and Parkland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Parkland
The main advantage of trading using opposite Woori Financial and Parkland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Parkland 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 Parkland will offset losses from the drop in Parkland's long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. KB Financial Group | Woori Financial vs. Banco De Chile | Woori Financial vs. Orix Corp Ads |
| Parkland vs. Meso Numismatics | Parkland vs. Tandy Leather Factory | Parkland vs. EVgo Equity Warrants | Parkland vs. Sally Beauty Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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