Correlation Between Nu Holdings and Woori Financial

Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Woori 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 Nu Holdings and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nu Holdings and Woori Financial Group, you can compare the effects of market volatilities on Nu Holdings and Woori 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 Nu Holdings with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Woori Financial.

Diversification Opportunities for Nu Holdings and Woori Financial

0.14

Correlation Coefficient

Nu Holdings  Woori Financial

Average diversification

The 3 months correlation between Nu Holdings and Woori is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group and Nu Holdings 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 Nu Holdings are associated (or correlated) with Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Nu Holdings i.e., Nu Holdings and Woori Financial go up and down completely randomly.

Pair Corralation between Nu Holdings and Woori Financial

Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 1.46 times more return on investment than Woori Financial. However, Nu Holdings is 1.46 times more volatile than Woori Financial Group. It trades about 0.11 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.04 per unit of risk. If you would invest  382.00  in Nu Holdings on September 14, 2024 and sell it today you would earn a total of  844.00  from holding Nu Holdings or generate 220.94% return on investment over 90 days.

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

Nu Holdings  vs.  Woori Financial Group

Nu Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nu Holdings and Woori Financial

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

The idea behind Nu Holdings and Woori Financial Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.