Correlation Between Moonbae Steel and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and Jeju Bank 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 Moonbae Steel and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moonbae Steel and Jeju Bank, you can compare the effects of market volatilities on Moonbae Steel and Jeju Bank 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 Moonbae Steel with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Jeju Bank.
Diversification Opportunities for Moonbae Steel and Jeju Bank
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Moonbae and Jeju is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Moonbae Steel 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 Moonbae Steel are associated (or correlated) with Jeju Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Bank has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Jeju Bank go up and down completely randomly.
Pair Corralation between Moonbae Steel and Jeju Bank
Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the Jeju Bank. But the stock apears to be less risky and, when comparing its historical volatility, Moonbae Steel is 1.03 times less risky than Jeju Bank. The stock trades about -0.41 of its potential returns per unit of risk. The Jeju Bank is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 827,000 in Jeju Bank on November 5, 2024 and sell it today you would lose (32,000) from holding Jeju Bank or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moonbae Steel vs. Jeju Bank
Performance |
| Timeline |
| Moonbae Steel |
| Jeju Bank |
Moonbae Steel and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moonbae Steel and Jeju Bank
The main advantage of trading using opposite Moonbae Steel and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Jeju Bank 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 Jeju Bank will offset losses from the drop in Jeju Bank's long position.| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. POSCO Holdings | Moonbae Steel vs. Hanwha Solutions | Moonbae Steel vs. Lotte Chemical Corp |
| Jeju Bank vs. AptaBio Therapeutics | Jeju Bank vs. Daewoo SBI SPAC | Jeju Bank vs. Dream Security co | Jeju Bank 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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