Correlation Between Daiyang Metal and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal 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 Daiyang Metal and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiyang Metal Co and Jeju Bank, you can compare the effects of market volatilities on Daiyang Metal 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 Daiyang Metal with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Jeju Bank.
Diversification Opportunities for Daiyang Metal and Jeju Bank
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daiyang and Jeju is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Daiyang Metal 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 Daiyang Metal Co 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 Daiyang Metal i.e., Daiyang Metal and Jeju Bank go up and down completely randomly.
Pair Corralation between Daiyang Metal and Jeju Bank
Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the Jeju Bank. But the stock apears to be less risky and, when comparing its historical volatility, Daiyang Metal Co is 1.04 times less risky than Jeju Bank. The stock trades about -0.01 of its potential returns per unit of risk. The Jeju Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 981,999 in Jeju Bank on August 25, 2024 and sell it today you would lose (173,999) from holding Jeju Bank or give up 17.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.97% |
| Values | Daily Returns |
Daiyang Metal Co vs. Jeju Bank
Performance |
| Timeline |
| Daiyang Metal |
| Jeju Bank |
Daiyang Metal and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Jeju Bank
The main advantage of trading using opposite Daiyang Metal and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal 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.| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Daewoo SBI SPAC | Daiyang Metal vs. Dream Security co | Daiyang Metal vs. Microfriend |
| Jeju Bank vs. Youngbo Chemical Co | Jeju Bank vs. Next Entertainment World | Jeju Bank vs. Tamul Multimedia Co | Jeju Bank vs. Dongnam Chemical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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