Correlation Between Daewoo SBI and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI 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 Daewoo SBI and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Jeju Bank, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Jeju Bank.
Diversification Opportunities for Daewoo SBI and Jeju Bank
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daewoo and Jeju is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Jeju Bank go up and down completely randomly.
Pair Corralation between Daewoo SBI and Jeju Bank
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Jeju Bank. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.98 times less risky than Jeju Bank. The stock trades about -0.14 of its potential returns per unit of risk. The Jeju Bank is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,106,101 in Jeju Bank on August 25, 2024 and sell it today you would lose (298,101) from holding Jeju Bank or give up 26.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Jeju Bank
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Jeju Bank |
Daewoo SBI and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Jeju Bank
The main advantage of trading using opposite Daewoo SBI and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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.| Daewoo SBI vs. Deutsch Motors | Daewoo SBI vs. Hanjinkal | Daewoo SBI vs. Busan Industrial Co | Daewoo SBI vs. Busan Ind |
| Jeju Bank vs. Youngbo Chemical Co | Jeju Bank vs. Next Entertainment World | Jeju Bank vs. Tamul Multimedia Co | Jeju Bank vs. Dongnam Chemical 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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