Correlation Between Kakao Games and Jb Financial

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

Diversification Opportunities for Kakao Games and Jb Financial

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Kakao and 175330 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kakao Games Corp and Jb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jb Financial and Kakao Games 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 Kakao Games Corp are associated (or correlated) with Jb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jb Financial has no effect on the direction of Kakao Games i.e., Kakao Games and Jb Financial go up and down completely randomly.

Pair Corralation between Kakao Games and Jb Financial

Assuming the 90 days trading horizon Kakao Games Corp is expected to under-perform the Jb Financial. In addition to that, Kakao Games is 1.17 times more volatile than Jb Financial. It trades about -0.05 of its total potential returns per unit of risk. Jb Financial is currently generating about 0.12 per unit of volatility. If you would invest  805,027  in Jb Financial on October 16, 2024 and sell it today you would earn a total of  929,973  from holding Jb Financial or generate 115.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kakao Games Corp  vs.  Jb Financial

 Performance 
       Timeline  
Kakao Games Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kakao Games Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kakao Games is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Jb Financial 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Jb Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jb Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kakao Games and Jb Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kakao Games and Jb Financial

The main advantage of trading using opposite Kakao Games and Jb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kakao Games position performs unexpectedly, Jb Financial 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 Jb Financial will offset losses from the drop in Jb Financial's long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Kakao Games as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Kakao Games' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Kakao Games' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Kakao Games Corp.
The idea behind Kakao Games Corp and Jb Financial 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.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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