Correlation Between Woori Financial and Middlefield Banc

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

Diversification Opportunities for Woori Financial and Middlefield Banc

-0.26

Correlation Coefficient

Woori Financial  Middlefield Banc

Very good diversification

The 3 months correlation between Woori and Middlefield is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc 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 Middlefield Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Banc has no effect on the direction of Woori Financial i.e., Woori Financial and Middlefield Banc go up and down completely randomly.

Pair Corralation between Woori Financial and Middlefield Banc

Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.6 times more return on investment than Middlefield Banc. However, Woori Financial Group is 1.67 times less risky than Middlefield Banc. It trades about 0.07 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.01 per unit of risk. If you would invest  2,217  in Woori Financial Group on December 7, 2024 and sell it today you would earn a total of  1,080  from holding Woori Financial Group or generate 48.71% return on investment over 90 days.

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

Woori Financial Group  vs.  Middlefield Banc

Woori Financial Group

Risk-Adjusted Performance

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

Middlefield Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Middlefield Banc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Woori Financial and Middlefield Banc

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

The idea behind Woori Financial Group and Middlefield Banc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.