Correlation Between Woori Financial and Smurfit Kappa

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

Diversification Opportunities for Woori Financial and Smurfit Kappa

-0.15

Correlation Coefficient

Woori Financial  Smurfit Kappa

Good diversification

The 3 months correlation between Woori and Smurfit is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group 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 Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Woori Financial i.e., Woori Financial and Smurfit Kappa go up and down completely randomly.

Pair Corralation between Woori Financial and Smurfit Kappa

Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.59 times more return on investment than Smurfit Kappa. However, Woori Financial Group is 1.69 times less risky than Smurfit Kappa. It trades about 0.08 of its potential returns per unit of risk. Smurfit Kappa Group is currently generating about -0.1 per unit of risk. If you would invest  3,121  in Woori Financial Group on December 28, 2024 and sell it today you would earn a total of  212.00  from holding Woori Financial Group or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Woori Financial Group  vs.  Smurfit Kappa Group

Woori Financial Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Woori Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Smurfit Kappa Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smurfit Kappa Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Woori Financial and Smurfit Kappa

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

The idea behind Woori Financial Group and Smurfit Kappa Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.