Correlation Between Woori Financial and Banner

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

Diversification Opportunities for Woori Financial and Banner

-0.3

Correlation Coefficient

Woori Financial  Banner

Very good diversification

The 3 months correlation between Woori and Banner is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Banner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banner 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 Banner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banner has no effect on the direction of Woori Financial i.e., Woori Financial and Banner go up and down completely randomly.

Pair Corralation between Woori Financial and Banner

Allowing for the 90-day total investment horizon Woori Financial is expected to generate 57.0 times less return on investment than Banner. But when comparing it to its historical volatility, Woori Financial Group is 1.38 times less risky than Banner. It trades about 0.0 of its potential returns per unit of risk. Banner is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,813  in Banner on September 4, 2024 and sell it today you would earn a total of  1,630  from holding Banner or generate 28.04% return on investment over 90 days.

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

Woori Financial Group  vs.  Banner

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 nearly stable technical and fundamental indicators, Woori Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Banner

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banner are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Banner reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and Banner

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

The idea behind Woori Financial Group and Banner 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.