Correlation Between Jeil Steel and Moonbae Steel

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

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

Diversification Opportunities for Jeil Steel and Moonbae Steel

-0.07

Correlation Coefficient

Jeil Steel  Moonbae Steel

Good diversification

The 3 months correlation between Jeil and Moonbae is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Jeil Steel Mfg and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and Jeil 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 Jeil Steel Mfg are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Jeil Steel i.e., Jeil Steel and Moonbae Steel go up and down completely randomly.

Pair Corralation between Jeil Steel and Moonbae Steel

Assuming the 90 days trading horizon Jeil Steel Mfg is expected to under-perform the Moonbae Steel. In addition to that, Jeil Steel is 1.23 times more volatile than Moonbae Steel. It trades about -0.07 of its total potential returns per unit of risk. Moonbae Steel is currently generating about -0.09 per unit of volatility. If you would invest  250,500  in Moonbae Steel on September 21, 2024 and sell it today you would lose (18,000) from holding Moonbae Steel or give up 7.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Jeil Steel Mfg  vs.  Moonbae Steel

Jeil Steel Mfg

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeil Steel Mfg are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jeil Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Moonbae Steel

Risk-Adjusted Performance

1 of 100

Very Weak

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

Pair Trading with Jeil Steel and Moonbae Steel

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

The idea behind Jeil Steel Mfg and Moonbae Steel 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.