Correlation Between KG Eco and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both KG Eco 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 KG Eco and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KG Eco Technology and Jeju Bank, you can compare the effects of market volatilities on KG Eco 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 KG Eco with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and Jeju Bank.
Diversification Opportunities for KG Eco and Jeju Bank
Almost no diversification
The 3 months correlation between 151860 and Jeju is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and KG Eco 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 KG Eco Technology 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 KG Eco i.e., KG Eco and Jeju Bank go up and down completely randomly.
Pair Corralation between KG Eco and Jeju Bank
Assuming the 90 days trading horizon KG Eco Technology is expected to generate 1.69 times more return on investment than Jeju Bank. However, KG Eco is 1.69 times more volatile than Jeju Bank. It trades about -0.06 of its potential returns per unit of risk. Jeju Bank is currently generating about -0.17 per unit of risk. If you would invest 502,000 in KG Eco Technology on September 12, 2024 and sell it today you would lose (37,500) from holding KG Eco Technology or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KG Eco Technology vs. Jeju Bank
Performance |
| Timeline |
| KG Eco Technology |
| Jeju Bank |
KG Eco and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and Jeju Bank
The main advantage of trading using opposite KG Eco and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco 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.| KG Eco vs. Samsung Electronics Co | KG Eco vs. Samsung Electronics Co | KG Eco vs. Naver | KG Eco vs. SK Hynix |
| Jeju Bank vs. Samsung Electronics Co | Jeju Bank vs. Samsung Electronics Co | Jeju Bank vs. SK Hynix | Jeju Bank vs. POSCO Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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