Correlation Between Jinro Distillers and Korea Real

Can any of the company-specific risk be diversified away by investing in both Jinro Distillers and Korea Real 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 Jinro Distillers and Korea Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinro Distillers Co and Korea Real Estate, you can compare the effects of market volatilities on Jinro Distillers and Korea Real 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 Jinro Distillers with a short position of Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and Korea Real.

Diversification Opportunities for Jinro Distillers and Korea Real

0.91

Correlation Coefficient

Jinro Distillers  Korea Real

Almost no diversification

The 3 months correlation between Jinro and Korea is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and Korea Real go up and down completely randomly.

Pair Corralation between Jinro Distillers and Korea Real

Assuming the 90 days trading horizon Jinro Distillers is expected to generate 1.14 times less return on investment than Korea Real. In addition to that, Jinro Distillers is 1.08 times more volatile than Korea Real Estate. It trades about 0.12 of its total potential returns per unit of risk. Korea Real Estate is currently generating about 0.14 per unit of volatility. If you would invest  94,473  in Korea Real Estate on December 1, 2024 and sell it today you would earn a total of  5,327  from holding Korea Real Estate or generate 5.64% return on investment over 90 days.

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

Jinro Distillers Co  vs.  Korea Real Estate

Jinro Distillers

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinro Distillers Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jinro Distillers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Real Estate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Real Estate are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jinro Distillers and Korea Real

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

The idea behind Jinro Distillers Co and Korea Real Estate 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.