Correlation Between Jeju Bank and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and Daiyang Metal 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 Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and Daiyang Metal Co, you can compare the effects of market volatilities on Jeju Bank and Daiyang Metal 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 Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and Daiyang Metal.
Diversification Opportunities for Jeju Bank and Daiyang Metal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jeju and Daiyang is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal 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 Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Jeju Bank i.e., Jeju Bank and Daiyang Metal go up and down completely randomly.
Pair Corralation between Jeju Bank and Daiyang Metal
Assuming the 90 days trading horizon Jeju Bank is expected to generate 2.8 times less return on investment than Daiyang Metal. But when comparing it to its historical volatility, Jeju Bank is 1.23 times less risky than Daiyang Metal. It trades about 0.02 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 117,000 in Daiyang Metal Co on August 25, 2024 and sell it today you would earn a total of 35,400 from holding Daiyang Metal Co or generate 30.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. Daiyang Metal Co
Performance |
| Timeline |
| Jeju Bank |
| Daiyang Metal |
Jeju Bank and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and Daiyang Metal
The main advantage of trading using opposite Jeju Bank and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Jeju Bank vs. Youngbo Chemical Co | Jeju Bank vs. Next Entertainment World | Jeju Bank vs. Tamul Multimedia Co | Jeju Bank vs. Dongnam Chemical Co |
| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Daewoo SBI SPAC | Daiyang Metal vs. Dream Security co | Daiyang Metal vs. Microfriend |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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