Correlation Between AM EAGLE and WOORI FIN

Can any of the company-specific risk be diversified away by investing in both AM EAGLE and WOORI FIN 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 AM EAGLE and WOORI FIN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AM EAGLE OUTFITTERS and WOORI FIN GRP, you can compare the effects of market volatilities on AM EAGLE and WOORI FIN 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 AM EAGLE with a short position of WOORI FIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and WOORI FIN.

Diversification Opportunities for AM EAGLE and WOORI FIN

0.33

Correlation Coefficient

AM EAGLE  WOORI FIN

Weak diversification

The 3 months correlation between AFG and WOORI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and WOORI FIN GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOORI FIN GRP and AM EAGLE 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 AM EAGLE OUTFITTERS are associated (or correlated) with WOORI FIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOORI FIN GRP has no effect on the direction of AM EAGLE i.e., AM EAGLE and WOORI FIN go up and down completely randomly.

Pair Corralation between AM EAGLE and WOORI FIN

Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the WOORI FIN. But the stock apears to be less risky and, when comparing its historical volatility, AM EAGLE OUTFITTERS is 1.14 times less risky than WOORI FIN. The stock trades about -0.02 of its potential returns per unit of risk. The WOORI FIN GRP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,041  in WOORI FIN GRP on September 17, 2024 and sell it today you would lose (61.00) from holding WOORI FIN GRP or give up 2.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

AM EAGLE OUTFITTERS  vs.  WOORI FIN GRP

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, AM EAGLE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WOORI FIN GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOORI FIN GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, WOORI FIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AM EAGLE and WOORI FIN

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

The idea behind AM EAGLE OUTFITTERS and WOORI FIN GRP 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.