Correlation Between Jeong Moon and DRGEM
Can any of the company-specific risk be diversified away by investing in both Jeong Moon and DRGEM 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 Jeong Moon and DRGEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeong Moon Information and DRGEM, you can compare the effects of market volatilities on Jeong Moon and DRGEM 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 Jeong Moon with a short position of DRGEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeong Moon and DRGEM.
Diversification Opportunities for Jeong Moon and DRGEM
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jeong and DRGEM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Jeong Moon Information and DRGEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRGEM and Jeong Moon 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 Jeong Moon Information are associated (or correlated) with DRGEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRGEM has no effect on the direction of Jeong Moon i.e., Jeong Moon and DRGEM go up and down completely randomly.
Pair Corralation between Jeong Moon and DRGEM
Assuming the 90 days trading horizon Jeong Moon Information is expected to generate 1.04 times more return on investment than DRGEM. However, Jeong Moon is 1.04 times more volatile than DRGEM. It trades about -0.05 of its potential returns per unit of risk. DRGEM is currently generating about -0.06 per unit of risk. If you would invest 129,600 in Jeong Moon Information on September 3, 2024 and sell it today you would lose (41,100) from holding Jeong Moon Information or give up 31.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeong Moon Information vs. DRGEM
Performance |
| Timeline |
| Jeong Moon Information |
| DRGEM |
Jeong Moon and DRGEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeong Moon and DRGEM
The main advantage of trading using opposite Jeong Moon and DRGEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeong Moon position performs unexpectedly, DRGEM 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 DRGEM will offset losses from the drop in DRGEM's long position.| Jeong Moon vs. Dongsin Engineering Construction | Jeong Moon vs. Doosan Fuel Cell | Jeong Moon vs. Daishin Balance 1 | Jeong Moon vs. Total Soft Bank |
| DRGEM vs. Namhwa Industrial Co | DRGEM vs. Jeong Moon Information | DRGEM vs. Tway Air Co | DRGEM vs. Daiyang Metal Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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