Correlation Between Iljin Materials and UJU Electronics
Can any of the company-specific risk be diversified away by investing in both Iljin Materials and UJU Electronics 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 Iljin Materials and UJU Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and UJU Electronics Co, you can compare the effects of market volatilities on Iljin Materials and UJU Electronics 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 Iljin Materials with a short position of UJU Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and UJU Electronics.
Diversification Opportunities for Iljin Materials and UJU Electronics
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iljin and UJU is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and UJU Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UJU Electronics and Iljin Materials 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 Iljin Materials Co are associated (or correlated) with UJU Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UJU Electronics has no effect on the direction of Iljin Materials i.e., Iljin Materials and UJU Electronics go up and down completely randomly.
Pair Corralation between Iljin Materials and UJU Electronics
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the UJU Electronics. In addition to that, Iljin Materials is 1.29 times more volatile than UJU Electronics Co. It trades about -0.37 of its total potential returns per unit of risk. UJU Electronics Co is currently generating about -0.11 per unit of volatility. If you would invest 1,460,000 in UJU Electronics Co on September 3, 2024 and sell it today you would lose (167,000) from holding UJU Electronics Co or give up 11.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Materials Co vs. UJU Electronics Co
Performance |
| Timeline |
| Iljin Materials |
| UJU Electronics |
Iljin Materials and UJU Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and UJU Electronics
The main advantage of trading using opposite Iljin Materials and UJU Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, UJU Electronics 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 UJU Electronics will offset losses from the drop in UJU Electronics' long position.| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
| UJU Electronics vs. Dongsin Engineering Construction | UJU Electronics vs. Doosan Fuel Cell | UJU Electronics vs. Daishin Balance 1 | UJU Electronics vs. Total Soft Bank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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