Correlation Between J Steel and Seoul Food

Can any of the company-specific risk be diversified away by investing in both J Steel and Seoul Food 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 J Steel and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between J Steel Co and Seoul Food Industrial, you can compare the effects of market volatilities on J Steel and Seoul Food 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 J Steel with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Seoul Food.

Diversification Opportunities for J Steel and Seoul Food

-0.62

Correlation Coefficient

J Steel  Seoul Food

Excellent diversification

The 3 months correlation between 023440 and Seoul is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and J Steel 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 J Steel Co are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of J Steel i.e., J Steel and Seoul Food go up and down completely randomly.

Pair Corralation between J Steel and Seoul Food

Assuming the 90 days trading horizon J Steel Co is expected to generate 2.99 times more return on investment than Seoul Food. However, J Steel is 2.99 times more volatile than Seoul Food Industrial. It trades about 0.01 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.07 per unit of risk. If you would invest  177,500  in J Steel Co on October 9, 2024 and sell it today you would lose (5,600) from holding J Steel Co or give up 3.15% of portfolio value over 90 days.

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

J Steel Co  vs.  Seoul Food Industrial

J Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Seoul Food Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seoul Food Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with J Steel and Seoul Food

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

The idea behind J Steel Co and Seoul Food Industrial 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.