Correlation Between Jeil Steel and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Jeil Steel and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on Jeil Steel and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeil Steel and Daejung Chemicals.
Diversification Opportunities for Jeil Steel and Daejung Chemicals
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Jeil and Daejung is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Jeil Steel Mfg and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Jeil Steel i.e., Jeil Steel and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Jeil Steel and Daejung Chemicals
Assuming the 90 days trading horizon Jeil Steel Mfg is expected to generate 2.29 times more return on investment than Daejung Chemicals. However, Jeil Steel is 2.29 times more volatile than Daejung Chemicals Metals. It trades about 0.0 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.04 per unit of risk. If you would invest 262,000 in Jeil Steel Mfg on August 31, 2024 and sell it today you would lose (83,000) from holding Jeil Steel Mfg or give up 31.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeil Steel Mfg vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Jeil Steel Mfg |
| Daejung Chemicals Metals |
Jeil Steel and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeil Steel and Daejung Chemicals
The main advantage of trading using opposite Jeil Steel and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeil Steel position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Jeil Steel vs. Korea Information Communications | Jeil Steel vs. ECSTELECOM Co | Jeil Steel vs. FOODWELL Co | Jeil Steel vs. DB Insurance Co |
| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. Hyosung Chemical Corp | Daejung Chemicals vs. LIG ES SPAC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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