Correlation Between Woori Financial and Citizens Northern

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

Diversification Opportunities for Woori Financial and Citizens Northern

-0.44

Correlation Coefficient

Woori Financial  Citizens Northern

Very good diversification

The 3 months correlation between Woori and Citizens is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Citizens Northern Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Northern Corp 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 Citizens Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Northern Corp has no effect on the direction of Woori Financial i.e., Woori Financial and Citizens Northern go up and down completely randomly.

Pair Corralation between Woori Financial and Citizens Northern

Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.98 times more return on investment than Citizens Northern. However, Woori Financial Group is 1.03 times less risky than Citizens Northern. It trades about -0.01 of its potential returns per unit of risk. Citizens Northern Corp is currently generating about -0.02 per unit of risk. If you would invest  3,123  in Woori Financial Group on January 29, 2024 and sell it today you would lose (18.00) from holding Woori Financial Group or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Woori Financial Group  vs.  Citizens Northern Corp

Woori Financial Group

Risk-Adjusted Performance

6 of 100

Modest

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 fragile technical and fundamental indicators, Woori Financial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Citizens Northern Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Northern Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Woori Financial and Citizens Northern

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

The idea behind Woori Financial Group and Citizens Northern Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.