Correlation Between Jin Air and Jeil Steel

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Can any of the company-specific risk be diversified away by investing in both Jin Air and Jeil Steel 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 Jin Air and Jeil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and Jeil Steel Mfg, you can compare the effects of market volatilities on Jin Air and Jeil Steel 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 Jin Air with a short position of Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Jeil Steel.

Diversification Opportunities for Jin Air and Jeil Steel

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Jin and Jeil is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg and Jin Air 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 Jin Air Co are associated (or correlated) with Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Jin Air i.e., Jin Air and Jeil Steel go up and down completely randomly.

Pair Corralation between Jin Air and Jeil Steel

Assuming the 90 days trading horizon Jin Air Co is expected to generate 0.67 times more return on investment than Jeil Steel. However, Jin Air Co is 1.5 times less risky than Jeil Steel. It trades about -0.08 of its potential returns per unit of risk. Jeil Steel Mfg is currently generating about -0.07 per unit of risk. If you would invest  1,120,000  in Jin Air Co on September 12, 2024 and sell it today you would lose (91,000) from holding Jin Air Co or give up 8.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Jin Air Co  vs.  Jeil Steel Mfg

 Performance 
       Timeline  
Jin Air 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Jin Air Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jin Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Jeil Steel Mfg 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Jeil Steel Mfg are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jeil Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Jin Air and Jeil Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jin Air and Jeil Steel

The main advantage of trading using opposite Jin Air and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air position performs unexpectedly, Jeil Steel 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.
The idea behind Jin Air Co and Jeil Steel Mfg pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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