Correlation Between Bank Rakyat and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat 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 Bank Rakyat and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Woori Financial Group, you can compare the effects of market volatilities on Bank Rakyat 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 Bank Rakyat with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Woori Financial.
Diversification Opportunities for Bank Rakyat and Woori Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Woori is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat 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 Bank Rakyat 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 Bank Rakyat 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 Bank Rakyat i.e., Bank Rakyat and Woori Financial go up and down completely randomly.
Pair Corralation between Bank Rakyat and Woori Financial
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Woori Financial. In addition to that, Bank Rakyat is 1.1 times more volatile than Woori Financial Group. It trades about -0.42 of its total potential returns per unit of risk. Woori Financial Group is currently generating about 0.05 per unit of volatility. If you would invest 3,117 in Woori Financial Group on February 4, 2024 and sell it today you would earn a total of 56.00 from holding Woori Financial Group or generate 1.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Rakyat vs. Woori Financial Group
Performance |
Timeline |
Bank Rakyat |
Woori Financial Group |
Bank Rakyat and Woori Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Rakyat and Woori Financial
The main advantage of trading using opposite Bank Rakyat and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat 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.Bank Rakyat vs. MSAD Insurance Group | Bank Rakyat vs. Daiwa House Industry | Bank Rakyat vs. Aquagold International | Bank Rakyat vs. Barloworld Ltd ADR |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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