Correlation Between Kg Chemical and Jb Financial
Can any of the company-specific risk be diversified away by investing in both Kg Chemical and Jb Financial 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 Kg Chemical and Jb Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kg Chemical and Jb Financial, you can compare the effects of market volatilities on Kg Chemical and Jb Financial 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 Kg Chemical with a short position of Jb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kg Chemical and Jb Financial.
Diversification Opportunities for Kg Chemical and Jb Financial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between 001390 and 175330 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kg Chemical and Jb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jb Financial and Kg Chemical 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 Kg Chemical are associated (or correlated) with Jb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jb Financial has no effect on the direction of Kg Chemical i.e., Kg Chemical and Jb Financial go up and down completely randomly.
Pair Corralation between Kg Chemical and Jb Financial
Assuming the 90 days trading horizon Kg Chemical is expected to under-perform the Jb Financial. But the stock apears to be less risky and, when comparing its historical volatility, Kg Chemical is 1.17 times less risky than Jb Financial. The stock trades about -0.22 of its potential returns per unit of risk. The Jb Financial is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest 1,610,000 in Jb Financial on November 5, 2024 and sell it today you would earn a total of 340,000 from holding Jb Financial or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kg Chemical vs. Jb Financial
Performance |
| Timeline |
| Kg Chemical |
| Jb Financial |
Kg Chemical and Jb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kg Chemical and Jb Financial
The main advantage of trading using opposite Kg Chemical and Jb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kg Chemical position performs unexpectedly, Jb Financial 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 Jb Financial will offset losses from the drop in Jb Financial's long position.| Kg Chemical vs. Moonbae Steel | Kg Chemical vs. Daewoo Engineering Construction | Kg Chemical vs. Seah Steel Corp | Kg Chemical vs. KEPCO Engineering Construction |
| Jb Financial vs. Shinhan Inverse Silver | Jb Financial vs. Jeju Bank | Jb Financial vs. Dongbu Insurance Co | Jb Financial vs. Woori Financial Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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