Correlation Between Samsung Electronics and Woori Financial

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

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

Diversification Opportunities for Samsung Electronics and Woori Financial

0.73

Correlation Coefficient

Samsung Electronics  Woori Financial

Poor diversification

The 3 months correlation between Samsung and Woori is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co 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 Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and Woori Financial go up and down completely randomly.

Pair Corralation between Samsung Electronics and Woori Financial

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.3 times more return on investment than Woori Financial. However, Samsung Electronics is 1.3 times more volatile than Woori Financial Group. It trades about 0.13 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.16 per unit of risk. If you would invest  5,320,000  in Samsung Electronics Co on December 29, 2024 and sell it today you would earn a total of  700,000  from holding Samsung Electronics Co or generate 13.16% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Woori Financial Group

Samsung Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Woori Financial Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Woori Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Woori Financial

The main advantage of trading using opposite Samsung Electronics and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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 Samsung Electronics Co 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.