Correlation Between Coloray International and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both Coloray International and Jeong Moon 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 Coloray International and Jeong Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and Jeong Moon Information, you can compare the effects of market volatilities on Coloray International and Jeong Moon 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 Coloray International with a short position of Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Jeong Moon.
Diversification Opportunities for Coloray International and Jeong Moon
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coloray and Jeong is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information and Coloray International 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 Coloray International Investment are associated (or correlated) with Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of Coloray International i.e., Coloray International and Jeong Moon go up and down completely randomly.
Pair Corralation between Coloray International and Jeong Moon
Assuming the 90 days trading horizon Coloray International Investment is expected to generate 2.82 times more return on investment than Jeong Moon. However, Coloray International is 2.82 times more volatile than Jeong Moon Information. It trades about 0.06 of its potential returns per unit of risk. Jeong Moon Information is currently generating about -0.11 per unit of risk. If you would invest 82,800 in Coloray International Investment on December 8, 2024 and sell it today you would earn a total of 2,800 from holding Coloray International Investment or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Jeong Moon Information
Performance |
| Timeline |
| Coloray International |
| Jeong Moon Information |
Coloray International and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Jeong Moon
The main advantage of trading using opposite Coloray International and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's long position.| Coloray International vs. LG Chem | ||
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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