Correlation Between Jeju Bank and Ssangyong Information

Can any of the company-specific risk be diversified away by investing in both Jeju Bank and Ssangyong Information 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 Jeju Bank and Ssangyong Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jeju Bank and Ssangyong Information Communication, you can compare the effects of market volatilities on Jeju Bank and Ssangyong Information 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 Jeju Bank with a short position of Ssangyong Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and Ssangyong Information.

Diversification Opportunities for Jeju Bank and Ssangyong Information

0.31

Correlation Coefficient

Jeju Bank  Ssangyong Information

Weak diversification

The 3 months correlation between Jeju and Ssangyong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information and Jeju Bank 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 Jeju Bank are associated (or correlated) with Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of Jeju Bank i.e., Jeju Bank and Ssangyong Information go up and down completely randomly.

Pair Corralation between Jeju Bank and Ssangyong Information

Assuming the 90 days trading horizon Jeju Bank is expected to generate 16.49 times less return on investment than Ssangyong Information. But when comparing it to its historical volatility, Jeju Bank is 1.81 times less risky than Ssangyong Information. It trades about 0.01 of its potential returns per unit of risk. Ssangyong Information Communication is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  64,100  in Ssangyong Information Communication on December 2, 2024 and sell it today you would earn a total of  21,700  from holding Ssangyong Information Communication or generate 33.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jeju Bank  vs.  Ssangyong Information Communic

Jeju Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jeju Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jeju Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ssangyong Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeju Bank and Ssangyong Information

The main advantage of trading using opposite Jeju Bank and Ssangyong Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, Ssangyong Information 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 Ssangyong Information will offset losses from the drop in Ssangyong Information's long position.

The idea behind Jeju Bank and Ssangyong Information Communication 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.