Correlation Between Ilji Technology and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Ilji Technology 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 Ilji Technology and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilji Technology Co and Jeju Bank, you can compare the effects of market volatilities on Ilji Technology 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 Ilji Technology with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilji Technology and Jeju Bank.
Diversification Opportunities for Ilji Technology and Jeju Bank
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ilji and Jeju is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ilji Technology Co and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Ilji Technology 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 Ilji Technology 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 Ilji Technology i.e., Ilji Technology and Jeju Bank go up and down completely randomly.
Pair Corralation between Ilji Technology and Jeju Bank
Assuming the 90 days trading horizon Ilji Technology Co is expected to generate 0.81 times more return on investment than Jeju Bank. However, Ilji Technology Co is 1.24 times less risky than Jeju Bank. It trades about -0.19 of its potential returns per unit of risk. Jeju Bank is currently generating about -0.17 per unit of risk. If you would invest 388,000 in Ilji Technology Co on September 12, 2024 and sell it today you would lose (36,000) from holding Ilji Technology Co or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ilji Technology Co vs. Jeju Bank
Performance |
| Timeline |
| Ilji Technology |
| Jeju Bank |
Ilji Technology and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilji Technology and Jeju Bank
The main advantage of trading using opposite Ilji Technology and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilji Technology 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.| Ilji Technology vs. Daou Data Corp | Ilji Technology vs. Solution Advanced Technology | Ilji Technology vs. Busan Industrial Co | Ilji Technology vs. Busan Ind |
| Jeju Bank vs. Samsung Electronics Co | Jeju Bank vs. Samsung Electronics Co | Jeju Bank vs. SK Hynix | Jeju Bank vs. POSCO 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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