Correlation Between Jeju Bank and DSC Investment
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and DSC Investment 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 DSC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and DSC Investment, you can compare the effects of market volatilities on Jeju Bank and DSC Investment 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 DSC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and DSC Investment.
Diversification Opportunities for Jeju Bank and DSC Investment
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jeju and DSC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and DSC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSC Investment 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 DSC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSC Investment has no effect on the direction of Jeju Bank i.e., Jeju Bank and DSC Investment go up and down completely randomly.
Pair Corralation between Jeju Bank and DSC Investment
Assuming the 90 days trading horizon Jeju Bank is expected to generate 2.46 times more return on investment than DSC Investment. However, Jeju Bank is 2.46 times more volatile than DSC Investment. It trades about 0.04 of its potential returns per unit of risk. DSC Investment is currently generating about -0.09 per unit of risk. If you would invest 809,000 in Jeju Bank on October 17, 2024 and sell it today you would earn a total of 10,000 from holding Jeju Bank or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Jeju Bank vs. DSC Investment
Performance |
| Timeline |
| Jeju Bank |
| DSC Investment |
Jeju Bank and DSC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and DSC Investment
The main advantage of trading using opposite Jeju Bank and DSC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, DSC Investment 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 DSC Investment will offset losses from the drop in DSC Investment's long position.| Jeju Bank vs. System and Application | Jeju Bank vs. Daishin Information Communications | Jeju Bank vs. Korea Information Engineering | Jeju Bank vs. Nice Information Telecommunication |
| DSC Investment vs. Cube Entertainment | DSC Investment vs. MEDIANA CoLtd | DSC Investment vs. Hanmi Semiconductor Co | DSC Investment vs. Tamul Multimedia Co |
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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