Correlation Between Pacific Premier and Woori Financial

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

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

Diversification Opportunities for Pacific Premier and Woori Financial

0.12

Correlation Coefficient

Pacific Premier  Woori Financial

Average diversification

The 3 months correlation between Pacific and Woori is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Premier Bancorp 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 Pacific Premier 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 Pacific Premier Bancorp 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 Pacific Premier i.e., Pacific Premier and Woori Financial go up and down completely randomly.

Pair Corralation between Pacific Premier and Woori Financial

Given the investment horizon of 90 days Pacific Premier is expected to generate 6.61 times less return on investment than Woori Financial. In addition to that, Pacific Premier is 1.52 times more volatile than Woori Financial Group. It trades about 0.0 of its total potential returns per unit of risk. Woori Financial Group is currently generating about 0.02 per unit of volatility. If you would invest  2,729  in Woori Financial Group on October 5, 2024 and sell it today you would earn a total of  380.00  from holding Woori Financial Group or generate 13.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Pacific Premier Bancorp  vs.  Woori Financial Group

Pacific Premier Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Premier Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Pacific Premier is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pacific Premier and Woori Financial

The main advantage of trading using opposite Pacific Premier and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Premier 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 Pacific Premier Bancorp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.