Correlation Between Dongnam Chemical and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical 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 Dongnam Chemical and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and Jeju Bank, you can compare the effects of market volatilities on Dongnam Chemical 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 Dongnam Chemical with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Jeju Bank.
Diversification Opportunities for Dongnam Chemical and Jeju Bank
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongnam and Jeju is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical i.e., Dongnam Chemical and Jeju Bank go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Jeju Bank
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to under-perform the Jeju Bank. But the stock apears to be less risky and, when comparing its historical volatility, Dongnam Chemical Co is 4.36 times less risky than Jeju Bank. The stock trades about -0.09 of its potential returns per unit of risk. The Jeju Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 963,341 in Jeju Bank on August 29, 2024 and sell it today you would lose (151,341) from holding Jeju Bank or give up 15.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. Jeju Bank
Performance |
| Timeline |
| Dongnam Chemical |
| Jeju Bank |
Dongnam Chemical and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Jeju Bank
The main advantage of trading using opposite Dongnam Chemical and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical 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.| Dongnam Chemical vs. AptaBio Therapeutics | Dongnam Chemical vs. Daewoo SBI SPAC | Dongnam Chemical vs. Dream Security co | Dongnam Chemical vs. Microfriend |
| Jeju Bank vs. AptaBio Therapeutics | Jeju Bank vs. Daewoo SBI SPAC | Jeju Bank vs. Dream Security co | Jeju Bank vs. Microfriend |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |