Correlation Between Woori Financial and Pungguk Ethanol

Can any of the company-specific risk be diversified away by investing in both Woori Financial and Pungguk Ethanol 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 Pungguk Ethanol 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 Pungguk Ethanol Industrial, you can compare the effects of market volatilities on Woori Financial and Pungguk Ethanol 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 Pungguk Ethanol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Pungguk Ethanol.

Diversification Opportunities for Woori Financial and Pungguk Ethanol

0.1

Correlation Coefficient

Woori Financial  Pungguk Ethanol

Average diversification

The 3 months correlation between Woori and Pungguk is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu 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 Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Woori Financial i.e., Woori Financial and Pungguk Ethanol go up and down completely randomly.

Pair Corralation between Woori Financial and Pungguk Ethanol

Assuming the 90 days trading horizon Woori Financial Group is expected to generate 1.32 times more return on investment than Pungguk Ethanol. However, Woori Financial is 1.32 times more volatile than Pungguk Ethanol Industrial. It trades about 0.05 of its potential returns per unit of risk. Pungguk Ethanol Industrial is currently generating about -0.14 per unit of risk. If you would invest  1,423,901  in Woori Financial Group on September 27, 2024 and sell it today you would earn a total of  150,099  from holding Woori Financial Group or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Woori Financial Group  vs.  Pungguk Ethanol Industrial

Woori Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woori Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Woori Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pungguk Ethanol Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pungguk Ethanol Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Woori Financial and Pungguk Ethanol

The main advantage of trading using opposite Woori Financial and Pungguk Ethanol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Pungguk Ethanol 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 Pungguk Ethanol will offset losses from the drop in Pungguk Ethanol's long position.

The idea behind Woori Financial Group and Pungguk Ethanol Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.