Correlation Between Fine Besteel and Woori Financial

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

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

Diversification Opportunities for Fine Besteel and Woori Financial

0.32

Correlation Coefficient

Fine Besteel  Woori Financial

Weak diversification

The 3 months correlation between Fine and Woori is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel 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 Fine Besteel 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 Fine Besteel 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 Fine Besteel i.e., Fine Besteel and Woori Financial go up and down completely randomly.

Pair Corralation between Fine Besteel and Woori Financial

Assuming the 90 days trading horizon Fine Besteel Co is expected to under-perform the Woori Financial. In addition to that, Fine Besteel is 2.37 times more volatile than Woori Financial Group. It trades about -0.04 of its total potential returns per unit of risk. Woori Financial Group is currently generating about 0.16 per unit of volatility. If you would invest  1,478,227  in Woori Financial Group on December 30, 2024 and sell it today you would earn a total of  186,773  from holding Woori Financial Group or generate 12.63% return on investment over 90 days.

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

Fine Besteel Co  vs.  Woori Financial Group

Fine Besteel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fine Besteel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 Fine Besteel and Woori Financial

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

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.