Correlation Between Jinro Distillers and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Jinro Distillers and Korean Reinsurance 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 Jinro Distillers and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jinro Distillers Co and Korean Reinsurance Co, you can compare the effects of market volatilities on Jinro Distillers and Korean Reinsurance 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 Jinro Distillers with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and Korean Reinsurance.
Diversification Opportunities for Jinro Distillers and Korean Reinsurance
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jinro and Korean is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Jinro Distillers and Korean Reinsurance
Assuming the 90 days trading horizon Jinro Distillers is expected to generate 1.27 times less return on investment than Korean Reinsurance. But when comparing it to its historical volatility, Jinro Distillers Co is 1.54 times less risky than Korean Reinsurance. It trades about 0.12 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 641,666 in Korean Reinsurance Co on October 14, 2024 and sell it today you would earn a total of 182,334 from holding Korean Reinsurance Co or generate 28.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jinro Distillers Co vs. Korean Reinsurance Co
Performance |
| Timeline |
| Jinro Distillers |
| Korean Reinsurance |
Jinro Distillers and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jinro Distillers and Korean Reinsurance
The main advantage of trading using opposite Jinro Distillers and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinro Distillers position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Jinro Distillers vs. EV Advanced Material | Jinro Distillers vs. Daishin Information Communications | Jinro Distillers vs. Kolon Plastics | Jinro Distillers vs. Ssangyong Materials Corp |
| Korean Reinsurance vs. Seoul Electronics Telecom | Korean Reinsurance vs. Sangsangin Investment Securities | Korean Reinsurance vs. Jinro Distillers Co | Korean Reinsurance vs. Korea Investment Holdings |
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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