Correlation Between Orix Corp and Woori Financial

Can any of the company-specific risk be diversified away by investing in both Orix Corp 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 Orix Corp and Woori Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orix Corp Ads and Woori Financial Group, you can compare the effects of market volatilities on Orix Corp 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 Orix Corp with a short position of Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and Woori Financial.

Diversification Opportunities for Orix Corp and Woori Financial

0.8

Correlation Coefficient

Orix Corp  Woori Financial

Very poor diversification

The 3 months correlation between Orix and Woori is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads 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 Orix Corp 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and Woori Financial go up and down completely randomly.

Pair Corralation between Orix Corp and Woori Financial

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the Woori Financial. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 1.6 times less risky than Woori Financial. The stock trades about -0.01 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  3,117  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	Strong
Accuracy	100.0%
Values	Daily Returns

Orix Corp Ads  vs.  Woori Financial Group

Orix Corp Ads

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Orix Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Woori Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Orix Corp and Woori Financial

The main advantage of trading using opposite Orix Corp and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp 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.

The idea behind Orix Corp Ads and Woori Financial 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.