Correlation Between Woori Financial and Woori Technology

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

Diversification Opportunities for Woori Financial and Woori Technology

0.52

Correlation Coefficient

Woori Financial  Woori Technology

Very weak diversification

The 3 months correlation between Woori and Woori is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Woori Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology Inv 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 Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology Inv has no effect on the direction of Woori Financial i.e., Woori Financial and Woori Technology go up and down completely randomly.

Pair Corralation between Woori Financial and Woori Technology

Assuming the 90 days trading horizon Woori Financial is expected to generate 6.78 times less return on investment than Woori Technology. But when comparing it to its historical volatility, Woori Financial Group is 2.5 times less risky than Woori Technology. It trades about 0.04 of its potential returns per unit of risk. Woori Technology Investment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  660,000  in Woori Technology Investment on September 12, 2024 and sell it today you would earn a total of  151,000  from holding Woori Technology Investment or generate 22.88% return on investment over 90 days.

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

Woori Financial Group  vs.  Woori Technology Investment

Woori Financial Group

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Woori Technology Inv

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Woori Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and Woori Technology

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

The idea behind Woori Financial Group and Woori Technology Investment 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.