Correlation Between FinVolution and WOORI FIN

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

By analyzing existing cross correlation between FinVolution Group and WOORI FIN GRP, you can compare the effects of market volatilities on FinVolution and WOORI FIN 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 FinVolution with a short position of WOORI FIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and WOORI FIN.

Diversification Opportunities for FinVolution and WOORI FIN

-0.2

Correlation Coefficient

FinVolution  WOORI FIN

Good diversification

The 3 months correlation between FinVolution and WOORI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and WOORI FIN GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOORI FIN GRP and FinVolution 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 FinVolution Group are associated (or correlated) with WOORI FIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOORI FIN GRP has no effect on the direction of FinVolution i.e., FinVolution and WOORI FIN go up and down completely randomly.

Pair Corralation between FinVolution and WOORI FIN

Given the investment horizon of 90 days FinVolution is expected to generate 1.38 times less return on investment than WOORI FIN. But when comparing it to its historical volatility, FinVolution Group is 1.73 times less risky than WOORI FIN. It trades about 0.04 of its potential returns per unit of risk. WOORI FIN GRP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,274  in WOORI FIN GRP on October 5, 2024 and sell it today you would earn a total of  626.00  from holding WOORI FIN GRP or generate 27.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.9%
Values	Daily Returns

FinVolution Group  vs.  WOORI FIN GRP

FinVolution Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FinVolution is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WOORI FIN GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOORI FIN GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, WOORI FIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FinVolution and WOORI FIN

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

The idea behind FinVolution Group and WOORI FIN GRP 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.