Correlation Between Woori Financial and Old Second

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

Diversification Opportunities for Woori Financial and Old Second

-0.07

Correlation Coefficient

Woori Financial  Old Second

Good diversification

The 3 months correlation between Woori and Old is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and Old Second Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Second 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 Old Second. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Second Bancorp has no effect on the direction of Woori Financial i.e., Woori Financial and Old Second go up and down completely randomly.

Pair Corralation between Woori Financial and Old Second

Allowing for the 90-day total investment horizon Woori Financial is expected to generate 9.91 times less return on investment than Old Second. In addition to that, Woori Financial is 1.11 times more volatile than Old Second Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Old Second Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  1,351  in Old Second Bancorp on February 5, 2024 and sell it today you would earn a total of  85.00  from holding Old Second Bancorp or generate 6.29% return on investment over 90 days.

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

Woori Financial Group  vs.  Old Second Bancorp

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Old Second Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Old Second Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Old Second may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Woori Financial and Old Second

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

The idea behind Woori Financial Group and Old Second 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.