Correlation Between Samhwa Paint and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Samhwa Paint and Jeju Semiconductor 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 Samhwa Paint and Jeju Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhwa Paint Industrial and Jeju Semiconductor Corp, you can compare the effects of market volatilities on Samhwa Paint and Jeju Semiconductor 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 Samhwa Paint with a short position of Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhwa Paint and Jeju Semiconductor.
Diversification Opportunities for Samhwa Paint and Jeju Semiconductor
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samhwa and Jeju is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samhwa Paint Industrial and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp and Samhwa Paint 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 Samhwa Paint Industrial are associated (or correlated) with Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Samhwa Paint i.e., Samhwa Paint and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Samhwa Paint and Jeju Semiconductor
Assuming the 90 days trading horizon Samhwa Paint Industrial is expected to generate 0.6 times more return on investment than Jeju Semiconductor. However, Samhwa Paint Industrial is 1.66 times less risky than Jeju Semiconductor. It trades about -0.05 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.18 per unit of risk. If you would invest 696,000 in Samhwa Paint Industrial on August 31, 2024 and sell it today you would lose (44,000) from holding Samhwa Paint Industrial or give up 6.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhwa Paint Industrial vs. Jeju Semiconductor Corp
Performance |
| Timeline |
| Samhwa Paint Industrial |
| Jeju Semiconductor Corp |
Samhwa Paint and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samhwa Paint and Jeju Semiconductor
The main advantage of trading using opposite Samhwa Paint and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhwa Paint position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor's long position.| Samhwa Paint vs. Barunson Entertainment Arts | Samhwa Paint vs. Dongil Steel Co | Samhwa Paint vs. T3 Entertainment Co | Samhwa Paint vs. Finebesteel |
| Jeju Semiconductor vs. MNtech Co | Jeju Semiconductor vs. Lion Chemtech Co | Jeju Semiconductor vs. Eagle Veterinary Technology | Jeju Semiconductor vs. Stic Investments |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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