Correlation Between Jeju Bank and FOODWELL
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and FOODWELL 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 FOODWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and FOODWELL Co, you can compare the effects of market volatilities on Jeju Bank and FOODWELL 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 FOODWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and FOODWELL.
Diversification Opportunities for Jeju Bank and FOODWELL
Very weak diversification
The 3 months correlation between Jeju and FOODWELL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL 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 FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Jeju Bank i.e., Jeju Bank and FOODWELL go up and down completely randomly.
Pair Corralation between Jeju Bank and FOODWELL
Assuming the 90 days trading horizon Jeju Bank is expected to under-perform the FOODWELL. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Bank is 1.24 times less risky than FOODWELL. The stock trades about -0.24 of its potential returns per unit of risk. The FOODWELL Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 504,000 in FOODWELL Co on October 28, 2024 and sell it today you would earn a total of 20,000 from holding FOODWELL Co or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. FOODWELL Co
Performance |
| Timeline |
| Jeju Bank |
| FOODWELL |
Jeju Bank and FOODWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and FOODWELL
The main advantage of trading using opposite Jeju Bank and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, FOODWELL 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 FOODWELL will offset losses from the drop in FOODWELL's long position.| Jeju Bank vs. Lotte Data Communication | Jeju Bank vs. Digital Power Communications | Jeju Bank vs. Worldex Industry Trading | Jeju Bank vs. Cloud Air CoLtd |
| FOODWELL vs. Busan Industrial Co | FOODWELL vs. Busan Ind | FOODWELL vs. RPBio Inc | FOODWELL vs. Finebesteel |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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