Correlation Between Lindeman Asia and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both Lindeman Asia 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 Lindeman Asia and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindeman Asia Investment and Jeju Bank, you can compare the effects of market volatilities on Lindeman Asia 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 Lindeman Asia with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and Jeju Bank.
Diversification Opportunities for Lindeman Asia and Jeju Bank
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lindeman and Jeju is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Lindeman Asia 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 Lindeman Asia Investment 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 Lindeman Asia i.e., Lindeman Asia and Jeju Bank go up and down completely randomly.
Pair Corralation between Lindeman Asia and Jeju Bank
Assuming the 90 days trading horizon Lindeman Asia Investment is expected to under-perform the Jeju Bank. In addition to that, Lindeman Asia is 2.58 times more volatile than Jeju Bank. It trades about -0.12 of its total potential returns per unit of risk. Jeju Bank is currently generating about -0.16 per unit of volatility. If you would invest 833,000 in Jeju Bank on September 1, 2024 and sell it today you would lose (40,000) from holding Jeju Bank or give up 4.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindeman Asia Investment vs. Jeju Bank
Performance |
| Timeline |
| Lindeman Asia Investment |
| Jeju Bank |
Lindeman Asia and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindeman Asia and Jeju Bank
The main advantage of trading using opposite Lindeman Asia and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindeman Asia 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.| Lindeman Asia vs. Hanwha InvestmentSecurities Co | Lindeman Asia vs. Solution Advanced Technology | Lindeman Asia vs. Busan Industrial Co | Lindeman Asia vs. Busan Ind |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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