Correlation Between Jeju Semiconductor and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Jeju Semiconductor and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Jeju Semiconductor and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Semiconductor and Hanjoo Light.
Diversification Opportunities for Jeju Semiconductor and Hanjoo Light
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jeju and Hanjoo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and Hanjoo Light go up and down completely randomly.
Pair Corralation between Jeju Semiconductor and Hanjoo Light
Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to under-perform the Hanjoo Light. In addition to that, Jeju Semiconductor is 1.16 times more volatile than Hanjoo Light Metal. It trades about -0.51 of its total potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.32 per unit of volatility. If you would invest 99,000 in Hanjoo Light Metal on August 27, 2024 and sell it today you would lose (14,200) from holding Hanjoo Light Metal or give up 14.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Semiconductor Corp vs. Hanjoo Light Metal
Performance |
| Timeline |
| Jeju Semiconductor Corp |
| Hanjoo Light Metal |
Jeju Semiconductor and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Semiconductor and Hanjoo Light
The main advantage of trading using opposite Jeju Semiconductor and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Semiconductor position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light'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 |
| Hanjoo Light vs. TOPMATERIAL LTD | Hanjoo Light vs. Korea Shipbuilding Offshore | Hanjoo Light vs. Polaris Office Corp | Hanjoo Light vs. National Plastic Co |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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