Correlation Between Woori Financial and Bosung Power

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

Diversification Opportunities for Woori Financial and Bosung Power

0.47

Correlation Coefficient

Woori Financial  Bosung Power

Very weak diversification

The 3 months correlation between Woori and Bosung is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology 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 Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Woori Financial i.e., Woori Financial and Bosung Power go up and down completely randomly.

Pair Corralation between Woori Financial and Bosung Power

Assuming the 90 days trading horizon Woori Financial Group is expected to under-perform the Bosung Power. But the stock apears to be less risky and, when comparing its historical volatility, Woori Financial Group is 1.59 times less risky than Bosung Power. The stock trades about -0.02 of its potential returns per unit of risk. The Bosung Power Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  241,000  in Bosung Power Technology on October 11, 2024 and sell it today you would earn a total of  21,000  from holding Bosung Power Technology or generate 8.71% return on investment over 90 days.

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

Woori Financial Group  vs.  Bosung Power Technology

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 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.

Bosung Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bosung Power Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Woori Financial and Bosung Power

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

The idea behind Woori Financial Group and Bosung Power Technology 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.