Correlation Between Jeju Semiconductor and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Jeju Semiconductor and Kumho Industrial 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 Jeju Semiconductor and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Semiconductor Corp and Kumho Industrial Co, you can compare the effects of market volatilities on Jeju Semiconductor and Kumho Industrial 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 Jeju Semiconductor with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Semiconductor and Kumho Industrial.
Diversification Opportunities for Jeju Semiconductor and Kumho Industrial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jeju and Kumho is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Jeju Semiconductor 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 Jeju Semiconductor Corp are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and Kumho Industrial go up and down completely randomly.
Pair Corralation between Jeju Semiconductor and Kumho Industrial
Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to under-perform the Kumho Industrial. In addition to that, Jeju Semiconductor is 1.52 times more volatile than Kumho Industrial Co. It trades about -0.18 of its total potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.13 per unit of volatility. If you would invest 348,500 in Kumho Industrial Co on August 31, 2024 and sell it today you would lose (57,000) from holding Kumho Industrial Co or give up 16.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Semiconductor Corp vs. Kumho Industrial Co
Performance |
| Timeline |
| Jeju Semiconductor Corp |
| Kumho Industrial |
Jeju Semiconductor and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Semiconductor and Kumho Industrial
The main advantage of trading using opposite Jeju Semiconductor and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Semiconductor position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Jeju Semiconductor vs. MNtech Co | Jeju Semiconductor vs. Lion Chemtech Co | Jeju Semiconductor vs. Eagle Veterinary Technology | Jeju Semiconductor vs. Stic Investments |
| Kumho Industrial vs. Mobileleader CoLtd | Kumho Industrial vs. Nice Information Telecommunication | Kumho Industrial vs. SK Telecom Co | Kumho Industrial vs. Shinsegae Information Communication |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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