Correlation Between Lion Chemtech and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech 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 Lion Chemtech and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Jeju Bank, you can compare the effects of market volatilities on Lion Chemtech 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 Lion Chemtech with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Jeju Bank.
Diversification Opportunities for Lion Chemtech and Jeju Bank
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lion and Jeju is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Lion Chemtech 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 Lion Chemtech Co 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 Lion Chemtech i.e., Lion Chemtech and Jeju Bank go up and down completely randomly.
Pair Corralation between Lion Chemtech and Jeju Bank
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the Jeju Bank. In addition to that, Lion Chemtech is 1.72 times more volatile than Jeju Bank. It trades about -0.15 of its total potential returns per unit of risk. Jeju Bank is currently generating about -0.22 per unit of volatility. If you would invest 827,000 in Jeju Bank on November 5, 2024 and sell it today you would lose (32,000) from holding Jeju Bank or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Jeju Bank
Performance |
| Timeline |
| Lion Chemtech |
| Jeju Bank |
Lion Chemtech and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Jeju Bank
The main advantage of trading using opposite Lion Chemtech and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech 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.| Lion Chemtech vs. Youngchang Chemical Co | Lion Chemtech vs. ABOV Semiconductor Co | Lion Chemtech vs. PNC Technologies co | Lion Chemtech vs. Puloon Technology |
| Jeju Bank vs. AptaBio Therapeutics | Jeju Bank vs. Daewoo SBI SPAC | Jeju Bank vs. Dream Security co | Jeju Bank vs. Microfriend |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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