Correlation Between Jeju Semiconductor and Daesung Industrial
Can any of the company-specific risk be diversified away by investing in both Jeju Semiconductor and Daesung 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 Daesung 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 Daesung Industrial Co, you can compare the effects of market volatilities on Jeju Semiconductor and Daesung 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 Daesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Semiconductor and Daesung Industrial.
Diversification Opportunities for Jeju Semiconductor and Daesung Industrial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jeju and Daesung is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Daesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung 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 Daesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Industrial has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and Daesung Industrial go up and down completely randomly.
Pair Corralation between Jeju Semiconductor and Daesung Industrial
Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to generate 2.59 times more return on investment than Daesung Industrial. However, Jeju Semiconductor is 2.59 times more volatile than Daesung Industrial Co. It trades about 0.17 of its potential returns per unit of risk. Daesung Industrial Co is currently generating about -0.26 per unit of risk. If you would invest 889,000 in Jeju Semiconductor Corp on October 13, 2024 and sell it today you would earn a total of 101,000 from holding Jeju Semiconductor Corp or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Jeju Semiconductor Corp vs. Daesung Industrial Co
Performance |
| Timeline |
| Jeju Semiconductor Corp |
| Daesung Industrial |
Jeju Semiconductor and Daesung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Semiconductor and Daesung Industrial
The main advantage of trading using opposite Jeju Semiconductor and Daesung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Semiconductor position performs unexpectedly, Daesung 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 Daesung Industrial will offset losses from the drop in Daesung Industrial's long position.| Jeju Semiconductor vs. Playgram Co | Jeju Semiconductor vs. Hanjin Transportation Co | Jeju Semiconductor vs. PlayD Co | Jeju Semiconductor vs. Innowireless Co |
| Daesung Industrial vs. InfoBank | Daesung Industrial vs. Jeju Semiconductor Corp | Daesung Industrial vs. DB Insurance Co | Daesung Industrial vs. BNK Financial Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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