Correlation Between Formetal and JC Chemical
Can any of the company-specific risk be diversified away by investing in both Formetal and JC Chemical 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 Formetal and JC Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and JC Chemical Co, you can compare the effects of market volatilities on Formetal and JC Chemical 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 Formetal with a short position of JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and JC Chemical.
Diversification Opportunities for Formetal and JC Chemical
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Formetal and 137950 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical and Formetal 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 Formetal Co are associated (or correlated) with JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of Formetal i.e., Formetal and JC Chemical go up and down completely randomly.
Pair Corralation between Formetal and JC Chemical
Assuming the 90 days trading horizon Formetal Co is expected to generate 1.04 times more return on investment than JC Chemical. However, Formetal is 1.04 times more volatile than JC Chemical Co. It trades about 0.04 of its potential returns per unit of risk. JC Chemical Co is currently generating about -0.08 per unit of risk. If you would invest 343,230 in Formetal Co on November 5, 2024 and sell it today you would earn a total of 63,270 from holding Formetal Co or generate 18.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. JC Chemical Co
Performance |
| Timeline |
| Formetal |
| JC Chemical |
Formetal and JC Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and JC Chemical
The main advantage of trading using opposite Formetal and JC Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, JC Chemical 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 JC Chemical will offset losses from the drop in JC Chemical's long position.| Formetal vs. Korea Electronic Certification | Formetal vs. Samyang Foods Co | Formetal vs. Cuckoo Electronics Co | Formetal vs. Vissem Electronics Co |
| JC Chemical vs. Samsung Electronics Co | JC Chemical vs. Samsung Electronics Co | JC Chemical vs. SK Hynix | JC Chemical vs. HMM 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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