Correlation Between Woori Financial and Southern First

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

Diversification Opportunities for Woori Financial and Southern First

-0.46

Correlation Coefficient

Woori Financial  Southern First

Very good diversification

The 3 months correlation between Woori and Southern is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Southern First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern First Bancshares 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 Southern First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern First Bancshares has no effect on the direction of Woori Financial i.e., Woori Financial and Southern First go up and down completely randomly.

Pair Corralation between Woori Financial and Southern First

Allowing for the 90-day total investment horizon Woori Financial is expected to generate 93.25 times less return on investment than Southern First. But when comparing it to its historical volatility, Woori Financial Group is 1.4 times less risky than Southern First. It trades about 0.0 of its potential returns per unit of risk. Southern First Bancshares is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,248  in Southern First Bancshares on August 30, 2024 and sell it today you would earn a total of  1,202  from holding Southern First Bancshares or generate 37.01% 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.  Southern First Bancshares

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.

Southern First Bancshares

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southern First Bancshares are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Southern First unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and Southern First

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

The idea behind Woori Financial Group and Southern First Bancshares 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.