Correlation Between Total Soft and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and Jeju Bank, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Jeju Bank.
Diversification Opportunities for Total Soft and Jeju Bank
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Total and Jeju is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Total Soft 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 Total Soft Bank 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 Total Soft i.e., Total Soft and Jeju Bank go up and down completely randomly.
Pair Corralation between Total Soft and Jeju Bank
Assuming the 90 days trading horizon Total Soft Bank is expected to under-perform the Jeju Bank. In addition to that, Total Soft is 5.56 times more volatile than Jeju Bank. It trades about -0.03 of its total potential returns per unit of risk. Jeju Bank is currently generating about -0.05 per unit of volatility. If you would invest 822,000 in Jeju Bank on August 31, 2024 and sell it today you would lose (13,000) from holding Jeju Bank or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. Jeju Bank
Performance |
| Timeline |
| Total Soft Bank |
| Jeju Bank |
Total Soft and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and Jeju Bank
The main advantage of trading using opposite Total Soft and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Kakao Games Corp | Total Soft vs. Devsisters corporation | Total Soft vs. Konan Technology | Total Soft vs. Nice Information Telecommunication |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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