Correlation Between Woori Financial and GSE Systems

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

Diversification Opportunities for Woori Financial and GSE Systems

0.35

Correlation Coefficient

Woori Financial  GSE Systems

Weak diversification

The 3 months correlation between Woori and GSE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and GSE Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSE Systems 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 GSE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSE Systems has no effect on the direction of Woori Financial i.e., Woori Financial and GSE Systems go up and down completely randomly.

Pair Corralation between Woori Financial and GSE Systems

If you would invest  459.00  in GSE Systems on October 9, 2024 and sell it today you would earn a total of  0.00  from holding GSE Systems or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	2.5%
Values	Daily Returns

Woori Financial Group  vs.  GSE Systems

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 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.

GSE Systems

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days GSE Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively fragile basic indicators, GSE Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and GSE Systems

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

The idea behind Woori Financial Group and GSE Systems 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.