Correlation Between Woori Financial and MedMira

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

Diversification Opportunities for Woori Financial and MedMira

-0.45

Correlation Coefficient

Woori Financial  MedMira

Very good diversification

The 3 months correlation between Woori and MedMira is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira 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 MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of Woori Financial i.e., Woori Financial and MedMira go up and down completely randomly.

Pair Corralation between Woori Financial and MedMira

Allowing for the 90-day total investment horizon Woori Financial Group is expected to under-perform the MedMira. But the stock apears to be less risky and, when comparing its historical volatility, Woori Financial Group is 21.61 times less risky than MedMira. The stock trades about 0.0 of its potential returns per unit of risk. The MedMira is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.31  in MedMira on September 1, 2024 and sell it today you would earn a total of  4.43  from holding MedMira or generate 338.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Woori Financial Group  vs.  MedMira

Woori Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woori Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Woori Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

MedMira

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MedMira are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MedMira reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woori Financial and MedMira

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

The idea behind Woori Financial Group and MedMira 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.