Correlation Between INtRON Biotechnology and Jeju Bank

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

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

Diversification Opportunities for INtRON Biotechnology and Jeju Bank

0.73

Correlation Coefficient

INtRON Biotechnology  Jeju Bank

Poor diversification

The 3 months correlation between INtRON and Jeju is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iNtRON Biotechnology and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and INtRON Biotechnology 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 iNtRON Biotechnology are associated (or correlated) with Jeju Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Bank has no effect on the direction of INtRON Biotechnology i.e., INtRON Biotechnology and Jeju Bank go up and down completely randomly.

Pair Corralation between INtRON Biotechnology and Jeju Bank

Assuming the 90 days trading horizon iNtRON Biotechnology is expected to generate 1.26 times more return on investment than Jeju Bank. However, INtRON Biotechnology is 1.26 times more volatile than Jeju Bank. It trades about 0.23 of its potential returns per unit of risk. Jeju Bank is currently generating about 0.16 per unit of risk. If you would invest  506,286  in iNtRON Biotechnology on October 12, 2024 and sell it today you would earn a total of  72,714  from holding iNtRON Biotechnology or generate 14.36% return on investment over 90 days.

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

iNtRON Biotechnology  vs.  Jeju Bank

iNtRON Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jeju Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with INtRON Biotechnology and Jeju Bank

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

The idea behind iNtRON Biotechnology and Jeju Bank 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.