Correlation Between Jahwa Electron and SillaJen

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

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

Diversification Opportunities for Jahwa Electron and SillaJen

-0.14

Correlation Coefficient

Jahwa Electron  SillaJen

Good diversification

The 3 months correlation between Jahwa and SillaJen is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jahwa Electron and SillaJen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SillaJen and Jahwa Electron 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 Jahwa Electron are associated (or correlated) with SillaJen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SillaJen has no effect on the direction of Jahwa Electron i.e., Jahwa Electron and SillaJen go up and down completely randomly.

Pair Corralation between Jahwa Electron and SillaJen

Assuming the 90 days trading horizon Jahwa Electron is expected to generate 0.88 times more return on investment than SillaJen. However, Jahwa Electron is 1.14 times less risky than SillaJen. It trades about -0.04 of its potential returns per unit of risk. SillaJen is currently generating about -0.04 per unit of risk. If you would invest  2,480,000  in Jahwa Electron on October 10, 2024 and sell it today you would lose (1,259,000) from holding Jahwa Electron or give up 50.77% of portfolio value over 90 days.

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

Jahwa Electron  vs.  SillaJen

Jahwa Electron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jahwa Electron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SillaJen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jahwa Electron and SillaJen

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

The idea behind Jahwa Electron and SillaJen 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.