Correlation Between InfoBank and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both InfoBank 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 InfoBank and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfoBank and Jeju Bank, you can compare the effects of market volatilities on InfoBank 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 InfoBank with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and Jeju Bank.
Diversification Opportunities for InfoBank and Jeju Bank
Poor diversification
The 3 months correlation between InfoBank and Jeju is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and InfoBank 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 InfoBank 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 InfoBank i.e., InfoBank and Jeju Bank go up and down completely randomly.
Pair Corralation between InfoBank and Jeju Bank
Assuming the 90 days trading horizon InfoBank is expected to generate 3.38 times more return on investment than Jeju Bank. However, InfoBank is 3.38 times more volatile than Jeju Bank. It trades about 0.2 of its potential returns per unit of risk. Jeju Bank is currently generating about 0.0 per unit of risk. If you would invest 597,000 in InfoBank on August 25, 2024 and sell it today you would earn a total of 130,000 from holding InfoBank or generate 21.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfoBank vs. Jeju Bank
Performance |
| Timeline |
| InfoBank |
| Jeju Bank |
InfoBank and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfoBank and Jeju Bank
The main advantage of trading using opposite InfoBank and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfoBank 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.| InfoBank vs. Daedong Metals Co | InfoBank vs. Woori Technology | InfoBank vs. Cots Technology Co | InfoBank vs. Lion Chemtech Co |
| Jeju Bank vs. Youngbo Chemical Co | Jeju Bank vs. Next Entertainment World | Jeju Bank vs. Tamul Multimedia Co | Jeju Bank vs. Dongnam Chemical 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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