Correlation Between Woori Financial and Capital Bancorp

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

Diversification Opportunities for Woori Financial and Capital Bancorp

-0.63

Correlation Coefficient

Woori Financial  Capital Bancorp

Excellent diversification

The 3 months correlation between Woori and Capital is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Capital Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Bancorp 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 Capital Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Bancorp has no effect on the direction of Woori Financial i.e., Woori Financial and Capital Bancorp go up and down completely randomly.

Pair Corralation between Woori Financial and Capital Bancorp

Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.95 times more return on investment than Capital Bancorp. However, Woori Financial Group is 1.06 times less risky than Capital Bancorp. It trades about 0.04 of its potential returns per unit of risk. Capital Bancorp is currently generating about 0.04 per unit of risk. If you would invest  2,359  in Woori Financial Group on September 24, 2024 and sell it today you would earn a total of  853.00  from holding Woori Financial Group or generate 36.16% return on investment over 90 days.

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

Woori Financial Group  vs.  Capital Bancorp

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 latest inconsistent 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.

Capital Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Capital Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and Capital Bancorp

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

The idea behind Woori Financial Group and Capital Bancorp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.