Correlation Between Woori Financial and CF Bankshares

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

Diversification Opportunities for Woori Financial and CF Bankshares

-0.47

Correlation Coefficient

Woori Financial  CF Bankshares

Very good diversification

The 3 months correlation between Woori and CFBK is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares 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 CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Woori Financial i.e., Woori Financial and CF Bankshares go up and down completely randomly.

Pair Corralation between Woori Financial and CF Bankshares

Allowing for the 90-day total investment horizon Woori Financial Group is expected to under-perform the CF Bankshares. But the stock apears to be less risky and, when comparing its historical volatility, Woori Financial Group is 1.34 times less risky than CF Bankshares. The stock trades about -0.03 of its potential returns per unit of risk. The CF Bankshares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,193  in CF Bankshares on September 11, 2024 and sell it today you would earn a total of  584.00  from holding CF Bankshares or generate 26.63% return on investment over 90 days.

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

Woori Financial Group  vs.  CF Bankshares

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

CF Bankshares

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CF Bankshares are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, CF Bankshares disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and CF Bankshares

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

The idea behind Woori Financial Group and CF Bankshares 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.