Correlation Between SK Bioscience and JC Chemical
Can any of the company-specific risk be diversified away by investing in both SK Bioscience and JC Chemical 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 SK Bioscience and JC Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Bioscience Co and JC Chemical Co, you can compare the effects of market volatilities on SK Bioscience and JC Chemical 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 SK Bioscience with a short position of JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Bioscience and JC Chemical.
Diversification Opportunities for SK Bioscience and JC Chemical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 302440 and 137950 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SK Bioscience Co and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical and SK Bioscience 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 SK Bioscience Co are associated (or correlated) with JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of SK Bioscience i.e., SK Bioscience and JC Chemical go up and down completely randomly.
Pair Corralation between SK Bioscience and JC Chemical
Assuming the 90 days trading horizon SK Bioscience Co is expected to generate 0.71 times more return on investment than JC Chemical. However, SK Bioscience Co is 1.41 times less risky than JC Chemical. It trades about -0.2 of its potential returns per unit of risk. JC Chemical Co is currently generating about -0.15 per unit of risk. If you would invest 5,410,000 in SK Bioscience Co on September 1, 2024 and sell it today you would lose (700,000) from holding SK Bioscience Co or give up 12.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SK Bioscience Co vs. JC Chemical Co
Performance |
| Timeline |
| SK Bioscience |
| JC Chemical |
SK Bioscience and JC Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Bioscience and JC Chemical
The main advantage of trading using opposite SK Bioscience and JC Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Bioscience position performs unexpectedly, JC Chemical 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 JC Chemical will offset losses from the drop in JC Chemical's long position.| SK Bioscience vs. SCI Information Service | SK Bioscience vs. Ni Steel | SK Bioscience vs. Jeil Steel Mfg | SK Bioscience vs. Dong A Steel Technology |
| JC Chemical vs. Korea Information Engineering | JC Chemical vs. DataSolution | JC Chemical vs. Cube Entertainment | JC Chemical vs. SCI Information Service |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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