Correlation Between US Physical and WOORI FIN

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

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

Diversification Opportunities for US Physical and WOORI FIN

-0.12

Correlation Coefficient

US Physical  WOORI FIN

Good diversification

The 3 months correlation between UPH and WOORI is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy 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 US Physical 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 US Physical Therapy 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 US Physical i.e., US Physical and WOORI FIN go up and down completely randomly.

Pair Corralation between US Physical and WOORI FIN

Assuming the 90 days horizon US Physical Therapy is expected to under-perform the WOORI FIN. In addition to that, US Physical is 1.01 times more volatile than WOORI FIN GRP. It trades about -0.11 of its total potential returns per unit of risk. WOORI FIN GRP is currently generating about -0.06 per unit of volatility. If you would invest  2,960  in WOORI FIN GRP on October 22, 2024 and sell it today you would lose (40.00) from holding WOORI FIN GRP or give up 1.35% of portfolio value over 90 days.

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

US Physical Therapy  vs.  WOORI FIN GRP

US Physical Therapy

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Physical Therapy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, US Physical reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with US Physical and WOORI FIN

The main advantage of trading using opposite US Physical and WOORI FIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical 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 US Physical Therapy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.