Correlation Between Woori Financial and Digital Imaging

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

Diversification Opportunities for Woori Financial and Digital Imaging

-0.33

Correlation Coefficient

Woori Financial  Digital Imaging

Very good diversification

The 3 months correlation between Woori and Digital is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech 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 Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of Woori Financial i.e., Woori Financial and Digital Imaging go up and down completely randomly.

Pair Corralation between Woori Financial and Digital Imaging

Assuming the 90 days trading horizon Woori Financial Group is expected to generate 0.4 times more return on investment than Digital Imaging. However, Woori Financial Group is 2.5 times less risky than Digital Imaging. It trades about 0.06 of its potential returns per unit of risk. Digital Imaging Technology is currently generating about -0.04 per unit of risk. If you would invest  1,309,513  in Woori Financial Group on October 9, 2024 and sell it today you would earn a total of  233,487  from holding Woori Financial Group or generate 17.83% 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.  Digital Imaging 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.

Digital Imaging Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Imaging Technology 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.

Pair Trading with Woori Financial and Digital Imaging

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

The idea behind Woori Financial Group and Digital Imaging 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.