Correlation Between Union Materials and Jeil Steel
Can any of the company-specific risk be diversified away by investing in both Union Materials and Jeil Steel 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 Union Materials and Jeil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and Jeil Steel Mfg, you can compare the effects of market volatilities on Union Materials and Jeil Steel 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 Union Materials with a short position of Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Jeil Steel.
Diversification Opportunities for Union Materials and Jeil Steel
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Jeil is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg and Union Materials 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 Union Materials Corp are associated (or correlated) with Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Union Materials i.e., Union Materials and Jeil Steel go up and down completely randomly.
Pair Corralation between Union Materials and Jeil Steel
Assuming the 90 days trading horizon Union Materials Corp is expected to generate 0.61 times more return on investment than Jeil Steel. However, Union Materials Corp is 1.63 times less risky than Jeil Steel. It trades about 0.08 of its potential returns per unit of risk. Jeil Steel Mfg is currently generating about -0.12 per unit of risk. If you would invest 218,500 in Union Materials Corp on September 13, 2024 and sell it today you would earn a total of 11,000 from holding Union Materials Corp or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Jeil Steel Mfg
Performance |
| Timeline |
| Union Materials Corp |
| Jeil Steel Mfg |
Union Materials and Jeil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Jeil Steel
The main advantage of trading using opposite Union Materials and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, Jeil Steel 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.| Union Materials vs. Daou Data Corp | Union Materials vs. Solution Advanced Technology | Union Materials vs. Busan Industrial Co | Union Materials vs. Busan Ind |
| Jeil Steel vs. Keum Kang Steel | Jeil Steel vs. Samhyun Steel Co | Jeil Steel vs. Gyeongnam Steel Co | Jeil Steel vs. Wonil Special Steel |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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