Correlation Between Jinro Distillers and ECSTELECOM

Can any of the company-specific risk be diversified away by investing in both Jinro Distillers and ECSTELECOM 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 ECSTELECOM 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 ECSTELECOM Co, you can compare the effects of market volatilities on Jinro Distillers and ECSTELECOM 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 ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and ECSTELECOM.

Diversification Opportunities for Jinro Distillers and ECSTELECOM

0.21

Correlation Coefficient

Jinro Distillers  ECSTELECOM

Modest diversification

The 3 months correlation between Jinro and ECSTELECOM is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM 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 ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and ECSTELECOM go up and down completely randomly.

Pair Corralation between Jinro Distillers and ECSTELECOM

Assuming the 90 days trading horizon Jinro Distillers is expected to generate 3.86 times less return on investment than ECSTELECOM. But when comparing it to its historical volatility, Jinro Distillers Co is 1.61 times less risky than ECSTELECOM. It trades about 0.07 of its potential returns per unit of risk. ECSTELECOM Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  291,500  in ECSTELECOM Co on September 28, 2024 and sell it today you would earn a total of  18,500  from holding ECSTELECOM Co or generate 6.35% return on investment over 90 days.

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

Jinro Distillers Co  vs.  ECSTELECOM Co

Jinro Distillers

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jinro Distillers Co are ranked lower than 2 (%) 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.

ECSTELECOM

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECSTELECOM Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ECSTELECOM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jinro Distillers and ECSTELECOM

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

The idea behind Jinro Distillers Co and ECSTELECOM 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.