Correlation Between Grupo Aval and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and Woori Financial 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 Grupo Aval and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and Woori Financial Group, you can compare the effects of market volatilities on Grupo Aval and Woori Financial 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 Grupo Aval with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Woori Financial.
Diversification Opportunities for Grupo Aval and Woori Financial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grupo and Woori is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group and Grupo Aval 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 Grupo Aval are associated (or correlated) with Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Grupo Aval i.e., Grupo Aval and Woori Financial go up and down completely randomly.
Pair Corralation between Grupo Aval and Woori Financial
Given the investment horizon of 90 days Grupo Aval is expected to under-perform the Woori Financial. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Aval is 1.16 times less risky than Woori Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Woori Financial Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,152 in Woori Financial Group on September 3, 2024 and sell it today you would earn a total of 422.00 from holding Woori Financial Group or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval vs. Woori Financial Group
Performance |
| Timeline |
| Grupo Aval |
| Woori Financial Group |
Grupo Aval and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and Woori Financial
The main advantage of trading using opposite Grupo Aval and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, Woori Financial 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 Woori Financial will offset losses from the drop in Woori Financial's long position.| Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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