Correlation Between I Jang and GeneFerm Biotechnology
Can any of the company-specific risk be diversified away by investing in both I Jang and GeneFerm Biotechnology 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 I Jang and GeneFerm Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between I Jang Industrial and GeneFerm Biotechnology Co, you can compare the effects of market volatilities on I Jang and GeneFerm Biotechnology 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 I Jang with a short position of GeneFerm Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Jang and GeneFerm Biotechnology.
Diversification Opportunities for I Jang and GeneFerm Biotechnology
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 8342 and GeneFerm is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and GeneFerm Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneFerm Biotechnology and I Jang 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 I Jang Industrial are associated (or correlated) with GeneFerm Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneFerm Biotechnology has no effect on the direction of I Jang i.e., I Jang and GeneFerm Biotechnology go up and down completely randomly.
Pair Corralation between I Jang and GeneFerm Biotechnology
Assuming the 90 days trading horizon I Jang Industrial is expected to generate 0.31 times more return on investment than GeneFerm Biotechnology. However, I Jang Industrial is 3.25 times less risky than GeneFerm Biotechnology. It trades about -0.05 of its potential returns per unit of risk. GeneFerm Biotechnology Co is currently generating about -0.24 per unit of risk. If you would invest 8,950 in I Jang Industrial on November 5, 2024 and sell it today you would lose (50.00) from holding I Jang Industrial or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
I Jang Industrial vs. GeneFerm Biotechnology Co
Performance |
| Timeline |
| I Jang Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| GeneFerm Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
I Jang and GeneFerm Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Jang and GeneFerm Biotechnology
The main advantage of trading using opposite I Jang and GeneFerm Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Jang position performs unexpectedly, GeneFerm Biotechnology 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 GeneFerm Biotechnology will offset losses from the drop in GeneFerm Biotechnology's long position.The idea behind I Jang Industrial and GeneFerm Biotechnology Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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