Correlation Between Automobile and Jeil Steel
Can any of the company-specific risk be diversified away by investing in both Automobile and Jeil Steel 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 Automobile and Jeil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Jeil Steel Mfg, you can compare the effects of market volatilities on Automobile and Jeil Steel 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 Automobile with a short position of Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Jeil Steel.
Diversification Opportunities for Automobile and Jeil Steel
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Automobile and Jeil is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg and Automobile 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 Automobile Pc are associated (or correlated) with Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Automobile i.e., Automobile and Jeil Steel go up and down completely randomly.
Pair Corralation between Automobile and Jeil Steel
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Jeil Steel. But the stock apears to be less risky and, when comparing its historical volatility, Automobile Pc is 1.34 times less risky than Jeil Steel. The stock trades about -0.08 of its potential returns per unit of risk. The Jeil Steel Mfg is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 286,000 in Jeil Steel Mfg on September 12, 2024 and sell it today you would lose (108,200) from holding Jeil Steel Mfg or give up 37.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Jeil Steel Mfg
Performance |
| Timeline |
| Automobile Pc |
| Jeil Steel Mfg |
Automobile and Jeil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Jeil Steel
The main advantage of trading using opposite Automobile and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Jeil Steel 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
| Jeil Steel vs. SEOJEON ELECTRIC MACHINERY | Jeil Steel vs. DB Insurance Co | Jeil Steel vs. Settlebank | Jeil Steel vs. Seoam Machinery Industry |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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