Correlation Between Woori Financial and Provident Financial
Can any of the company-specific risk be diversified away by investing in both Woori Financial and Provident 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 Woori Financial and Provident Financial 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 Provident Financial Holdings, you can compare the effects of market volatilities on Woori Financial and Provident 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 Woori Financial with a short position of Provident Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and Provident Financial.
Diversification Opportunities for Woori Financial and Provident Financial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Provident is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Provident Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 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 Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Woori Financial i.e., Woori Financial and Provident Financial go up and down completely randomly.
Pair Corralation between Woori Financial and Provident Financial
Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 1.08 times more return on investment than Provident Financial. However, Woori Financial is 1.08 times more volatile than Provident Financial Holdings. It trades about 0.07 of its potential returns per unit of risk. Provident Financial Holdings is currently generating about 0.06 per unit of risk. If you would invest 2,439 in Woori Financial Group on September 2, 2024 and sell it today you would earn a total of 1,135 from holding Woori Financial Group or generate 46.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Woori Financial Group vs. Provident Financial Holdings
Performance |
| Timeline |
| Woori Financial Group |
| Provident Financial |
Woori Financial and Provident Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and Provident Financial
The main advantage of trading using opposite Woori Financial and Provident Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial position performs unexpectedly, Provident 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 Provident Financial will offset losses from the drop in Provident Financial's long position.| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. KB Financial Group | Woori Financial vs. Banco De Chile | Woori Financial vs. Orix Corp Ads |
| Provident Financial vs. Home Federal Bancorp | Provident Financial vs. Magyar Bancorp | Provident Financial vs. Community West Bancshares | Provident Financial vs. First Northwest Bancorp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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