Correlation Between Woori Financial and Victory Bancorp

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

Diversification Opportunities for Woori Financial and Victory Bancorp

-0.13

Correlation Coefficient

Woori Financial  Victory Bancorp

Good diversification

The 3 months correlation between Woori and Victory is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and The Victory Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Bancorp 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 Victory Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Bancorp has no effect on the direction of Woori Financial i.e., Woori Financial and Victory Bancorp go up and down completely randomly.

Pair Corralation between Woori Financial and Victory Bancorp

Allowing for the 90-day total investment horizon Woori Financial Group is expected to under-perform the Victory Bancorp. In addition to that, Woori Financial is 1.24 times more volatile than The Victory Bancorp. It trades about -0.32 of its total potential returns per unit of risk. The Victory Bancorp is currently generating about -0.28 per unit of volatility. If you would invest  1,115  in The Victory Bancorp on January 20, 2024 and sell it today you would lose (95.00) from holding The Victory Bancorp or give up 8.52% of portfolio value over 90 days.

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

Woori Financial Group  vs.  The Victory Bancorp

Woori Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Woori Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Victory Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Victory Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Victory Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Woori Financial and Victory Bancorp

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

The idea behind Woori Financial Group and The Victory Bancorp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.