Correlation Between Jeju Bank and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and Hankook Furniture 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 Jeju Bank and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and Hankook Furniture Co, you can compare the effects of market volatilities on Jeju Bank and Hankook Furniture 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 Jeju Bank with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and Hankook Furniture.
Diversification Opportunities for Jeju Bank and Hankook Furniture
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jeju and Hankook is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Jeju Bank 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 Jeju Bank are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Jeju Bank i.e., Jeju Bank and Hankook Furniture go up and down completely randomly.
Pair Corralation between Jeju Bank and Hankook Furniture
Assuming the 90 days trading horizon Jeju Bank is expected to under-perform the Hankook Furniture. In addition to that, Jeju Bank is 3.42 times more volatile than Hankook Furniture Co. It trades about -0.01 of its total potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.0 per unit of volatility. If you would invest 406,447 in Hankook Furniture Co on October 13, 2024 and sell it today you would lose (5,947) from holding Hankook Furniture Co or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. Hankook Furniture Co
Performance |
| Timeline |
| Jeju Bank |
| Hankook Furniture |
Jeju Bank and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and Hankook Furniture
The main advantage of trading using opposite Jeju Bank and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Jeju Bank vs. Moadata Co | Jeju Bank vs. Polaris Office Corp | Jeju Bank vs. Lotte Data Communication | Jeju Bank vs. NICE Information Service |
| Hankook Furniture vs. Jeju Bank | Hankook Furniture vs. Dong A Steel Technology | Hankook Furniture vs. Digital Imaging Technology | Hankook Furniture vs. Industrial Bank |
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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