Correlation Between WOORI FIN and United Insurance

Can any of the company-specific risk be diversified away by investing in both WOORI FIN and United Insurance 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 FIN and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WOORI FIN GRP and United Insurance Holdings, you can compare the effects of market volatilities on WOORI FIN and United Insurance 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 FIN with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOORI FIN and United Insurance.

Diversification Opportunities for WOORI FIN and United Insurance

-0.39

Correlation Coefficient

WOORI FIN  United Insurance

Very good diversification

The 3 months correlation between WOORI and United is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding WOORI FIN GRP and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings and WOORI FIN 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 FIN GRP are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of WOORI FIN i.e., WOORI FIN and United Insurance go up and down completely randomly.

Pair Corralation between WOORI FIN and United Insurance

Assuming the 90 days trading horizon WOORI FIN GRP is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, WOORI FIN GRP is 1.99 times less risky than United Insurance. The stock trades about -0.06 of its potential returns per unit of risk. The United Insurance Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  902.00  in United Insurance Holdings on October 23, 2024 and sell it today you would earn a total of  268.00  from holding United Insurance Holdings or generate 29.71% return on investment over 90 days.

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

WOORI FIN GRP  vs.  United Insurance Holdings

WOORI FIN GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOORI FIN GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

United Insurance Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WOORI FIN and United Insurance

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

The idea behind WOORI FIN GRP and United Insurance Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.