Correlation Between Jeju Semiconductor and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Jeju Semiconductor and Dongbu 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 Jeju Semiconductor and Dongbu Steel 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 Dongbu Steel Co, you can compare the effects of market volatilities on Jeju Semiconductor and Dongbu 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 Jeju Semiconductor with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Semiconductor and Dongbu Steel.
Diversification Opportunities for Jeju Semiconductor and Dongbu Steel
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeju and Dongbu is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel 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 Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and Dongbu Steel go up and down completely randomly.
Pair Corralation between Jeju Semiconductor and Dongbu Steel
Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to under-perform the Dongbu Steel. In addition to that, Jeju Semiconductor is 1.08 times more volatile than Dongbu Steel Co. It trades about -0.47 of its total potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.02 per unit of volatility. If you would invest 669,000 in Dongbu Steel Co on August 29, 2024 and sell it today you would lose (10,000) from holding Dongbu Steel Co or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Semiconductor Corp vs. Dongbu Steel Co
Performance |
| Timeline |
| Jeju Semiconductor Corp |
| Dongbu Steel |
Jeju Semiconductor and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Semiconductor and Dongbu Steel
The main advantage of trading using opposite Jeju Semiconductor and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Semiconductor position performs unexpectedly, Dongbu 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| Jeju Semiconductor vs. Korea Real Estate | Jeju Semiconductor vs. Korea Ratings Co | Jeju Semiconductor vs. IQuest Co | Jeju Semiconductor vs. Wonbang Tech Co |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. Lotte Chemical Corp | Dongbu Steel vs. Hyundai Steel | Dongbu Steel vs. Seah Steel Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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