Correlation Between Worldex Industry and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Worldex Industry and Jeju Bank 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 Worldex Industry and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldex Industry Trading and Jeju Bank, you can compare the effects of market volatilities on Worldex Industry and Jeju Bank 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 Worldex Industry with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldex Industry and Jeju Bank.
Diversification Opportunities for Worldex Industry and Jeju Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Worldex and Jeju is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Worldex Industry Trading and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Worldex Industry 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 Worldex Industry Trading are associated (or correlated) with Jeju Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Bank has no effect on the direction of Worldex Industry i.e., Worldex Industry and Jeju Bank go up and down completely randomly.
Pair Corralation between Worldex Industry and Jeju Bank
Assuming the 90 days trading horizon Worldex Industry Trading is expected to generate 2.0 times more return on investment than Jeju Bank. However, Worldex Industry is 2.0 times more volatile than Jeju Bank. It trades about 0.1 of its potential returns per unit of risk. Jeju Bank is currently generating about -0.35 per unit of risk. If you would invest 1,694,000 in Worldex Industry Trading on October 29, 2024 and sell it today you would earn a total of 66,000 from holding Worldex Industry Trading or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldex Industry Trading vs. Jeju Bank
Performance |
| Timeline |
| Worldex Industry Trading |
| Jeju Bank |
Worldex Industry and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldex Industry and Jeju Bank
The main advantage of trading using opposite Worldex Industry and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldex Industry position performs unexpectedly, Jeju Bank 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 Jeju Bank will offset losses from the drop in Jeju Bank's long position.| Worldex Industry vs. WONIK Materials CoLtd | Worldex Industry vs. SS TECH | Worldex Industry vs. TES Co | Worldex Industry vs. LEENO Industrial |
| Jeju Bank vs. Heungkuk Metaltech CoLtd | Jeju Bank vs. Duksan Hi Metal | Jeju Bank vs. Homecast CoLtd | Jeju Bank vs. Jeju Semiconductor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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