Correlation Between Woori Financial and Sangsangin Investment

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

Diversification Opportunities for Woori Financial and Sangsangin Investment

-0.04

Correlation Coefficient

Woori Financial  Sangsangin Investment

Good diversification

The 3 months correlation between Woori and Sangsangin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Sangsangin Investment Securiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsangin Investment 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 Sangsangin Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsangin Investment has no effect on the direction of Woori Financial i.e., Woori Financial and Sangsangin Investment go up and down completely randomly.

Pair Corralation between Woori Financial and Sangsangin Investment

Assuming the 90 days trading horizon Woori Financial Group is expected to generate 1.37 times more return on investment than Sangsangin Investment. However, Woori Financial is 1.37 times more volatile than Sangsangin Investment Securities. It trades about 0.03 of its potential returns per unit of risk. Sangsangin Investment Securities is currently generating about -0.07 per unit of risk. If you would invest  1,630,185  in Woori Financial Group on December 2, 2024 and sell it today you would earn a total of  27,815  from holding Woori Financial Group or generate 1.71% return on investment over 90 days.

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

Woori Financial Group  vs.  Sangsangin Investment Securiti

Woori Financial Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Woori Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sangsangin Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sangsangin Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sangsangin Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Woori Financial and Sangsangin Investment

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

The idea behind Woori Financial Group and Sangsangin Investment Securities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.