Correlation Between Jeju Bank and N Citron

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

By analyzing existing cross correlation between Jeju Bank and N Citron, you can compare the effects of market volatilities on Jeju Bank and N Citron 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 N Citron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and N Citron.

Diversification Opportunities for Jeju Bank and N Citron

-0.31

Correlation Coefficient

Jeju Bank  N Citron

Very good diversification

The 3 months correlation between Jeju and 101400 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and N Citron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Citron 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 N Citron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Citron has no effect on the direction of Jeju Bank i.e., Jeju Bank and N Citron go up and down completely randomly.

Pair Corralation between Jeju Bank and N Citron

Assuming the 90 days trading horizon Jeju Bank is expected to generate 0.51 times more return on investment than N Citron. However, Jeju Bank is 1.96 times less risky than N Citron. It trades about 0.0 of its potential returns per unit of risk. N Citron is currently generating about -0.01 per unit of risk. If you would invest  782,000  in Jeju Bank on December 23, 2024 and sell it today you would lose (2,000) from holding Jeju Bank or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jeju Bank  vs.  N Citron

Jeju Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeju Bank has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

N Citron

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Jeju Bank and N Citron

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

The idea behind Jeju Bank and N Citron 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 Global Correlations module to find global opportunities by holding instruments from different markets.