Correlation Between Jeil Steel and Automobile
Can any of the company-specific risk be diversified away by investing in both Jeil Steel and Automobile 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 Jeil Steel and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeil Steel Mfg and Automobile Pc, you can compare the effects of market volatilities on Jeil Steel and Automobile 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 Jeil Steel with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeil Steel and Automobile.
Diversification Opportunities for Jeil Steel and Automobile
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeil and Automobile is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jeil Steel Mfg and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and Jeil Steel 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 Jeil Steel Mfg are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Jeil Steel i.e., Jeil Steel and Automobile go up and down completely randomly.
Pair Corralation between Jeil Steel and Automobile
Assuming the 90 days trading horizon Jeil Steel Mfg is expected to generate 1.34 times more return on investment than Automobile. However, Jeil Steel is 1.34 times more volatile than Automobile Pc. It trades about -0.01 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.08 per unit of risk. 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 |
Jeil Steel Mfg vs. Automobile Pc
Performance |
| Timeline |
| Jeil Steel Mfg |
| Automobile Pc |
Jeil Steel and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeil Steel and Automobile
The main advantage of trading using opposite Jeil Steel and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeil Steel position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Jeil Steel vs. SEOJEON ELECTRIC MACHINERY | Jeil Steel vs. DB Insurance Co | Jeil Steel vs. Settlebank | Jeil Steel vs. Seoam Machinery Industry |
| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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