Correlation Between Woori Financial and Samsung Life

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

Diversification Opportunities for Woori Financial and Samsung Life

0.63

Correlation Coefficient

Woori Financial  Samsung Life

Poor diversification

The 3 months correlation between Woori and Samsung is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Woori Financial i.e., Woori Financial and Samsung Life go up and down completely randomly.

Pair Corralation between Woori Financial and Samsung Life

Assuming the 90 days trading horizon Woori Financial is expected to generate 2.56 times less return on investment than Samsung Life. But when comparing it to its historical volatility, Woori Financial Group is 1.5 times less risky than Samsung Life. It trades about 0.05 of its potential returns per unit of risk. Samsung Life is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,720,000  in Samsung Life on September 2, 2024 and sell it today you would earn a total of  990,000  from holding Samsung Life or generate 10.19% return on investment over 90 days.

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

Woori Financial Group  vs.  Samsung Life

Woori Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 3 (%) 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.

Samsung Life

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Life are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Woori Financial and Samsung Life

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

The idea behind Woori Financial Group and Samsung Life 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.