Correlation Between Banco Santander and Woori Financial

Can any of the company-specific risk be diversified away by investing in both Banco Santander and Woori Financial 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 Banco Santander and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Santander Brasil and Woori Financial Group, you can compare the effects of market volatilities on Banco Santander and Woori Financial 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 Banco Santander with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Woori Financial.

Diversification Opportunities for Banco Santander and Woori Financial

0.44

Correlation Coefficient

Banco Santander  Woori Financial

Very weak diversification

The 3 months correlation between Banco and Woori is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group and Banco Santander 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 Banco Santander Brasil are associated (or correlated) with Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Banco Santander i.e., Banco Santander and Woori Financial go up and down completely randomly.

Pair Corralation between Banco Santander and Woori Financial

Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Woori Financial. In addition to that, Banco Santander is 2.08 times more volatile than Woori Financial Group. It trades about -0.27 of its total potential returns per unit of risk. Woori Financial Group is currently generating about 0.28 per unit of volatility. If you would invest  3,366  in Woori Financial Group on September 1, 2024 and sell it today you would earn a total of  208.00  from holding Woori Financial Group or generate 6.18% return on investment over 90 days.

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

Banco Santander Brasil  vs.  Woori Financial Group

Banco Santander Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Brasil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 nearly stable technical and fundamental indicators, Woori Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Banco Santander and Woori Financial

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

The idea behind Banco Santander Brasil and Woori Financial Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.