Correlation Between Woori Financial and Five Star

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

Diversification Opportunities for Woori Financial and Five Star

-0.4

Correlation Coefficient

Woori Financial  Five Star

Very good diversification

The 3 months correlation between Woori and Five is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Five Star Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Star Bancorp 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 Five Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Star Bancorp has no effect on the direction of Woori Financial i.e., Woori Financial and Five Star go up and down completely randomly.

Pair Corralation between Woori Financial and Five Star

Allowing for the 90-day total investment horizon Woori Financial Group is expected to under-perform the Five Star. But the stock apears to be less risky and, when comparing its historical volatility, Woori Financial Group is 1.25 times less risky than Five Star. The stock trades about -0.05 of its potential returns per unit of risk. The Five Star Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,934  in Five Star Bancorp on September 13, 2024 and sell it today you would earn a total of  483.00  from holding Five Star Bancorp or generate 16.46% return on investment over 90 days.

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

Woori Financial Group  vs.  Five Star Bancorp

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Five Star Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Five Star Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Five Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and Five Star

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

The idea behind Woori Financial Group and Five Star Bancorp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.