Correlation Between Jeju Bank and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and KakaoBank Corp 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 KakaoBank Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and KakaoBank Corp, you can compare the effects of market volatilities on Jeju Bank and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and KakaoBank Corp.
Diversification Opportunities for Jeju Bank and KakaoBank Corp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jeju and KakaoBank is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Jeju Bank i.e., Jeju Bank and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Jeju Bank and KakaoBank Corp
Assuming the 90 days trading horizon Jeju Bank is expected to under-perform the KakaoBank Corp. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Bank is 1.44 times less risky than KakaoBank Corp. The stock trades about -0.16 of its potential returns per unit of risk. The KakaoBank Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,165,000 in KakaoBank Corp on September 1, 2024 and sell it today you would earn a total of 70,000 from holding KakaoBank Corp or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. KakaoBank Corp
Performance |
| Timeline |
| Jeju Bank |
| KakaoBank Corp |
Jeju Bank and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and KakaoBank Corp
The main advantage of trading using opposite Jeju Bank and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Jeju Bank vs. AptaBio Therapeutics | Jeju Bank vs. Daewoo SBI SPAC | Jeju Bank vs. Dream Security co | Jeju Bank vs. Microfriend |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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