Correlation Between Innowireless and Jeju Semiconductor

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

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

Diversification Opportunities for Innowireless and Jeju Semiconductor

0.31

Correlation Coefficient

Innowireless  Jeju Semiconductor

Weak diversification

The 3 months correlation between Innowireless and Jeju is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp and Innowireless 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 Innowireless Co are associated (or correlated) with Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Innowireless i.e., Innowireless and Jeju Semiconductor go up and down completely randomly.

Pair Corralation between Innowireless and Jeju Semiconductor

Assuming the 90 days trading horizon Innowireless Co is expected to generate 0.53 times more return on investment than Jeju Semiconductor. However, Innowireless Co is 1.9 times less risky than Jeju Semiconductor. It trades about -0.06 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.04 per unit of risk. If you would invest  2,948,057  in Innowireless Co on December 27, 2024 and sell it today you would lose (963,057) from holding Innowireless Co or give up 32.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.94%
Values	Daily Returns

Innowireless Co  vs.  Jeju Semiconductor Corp

Innowireless

Risk-Adjusted Performance

Very Weak

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

Jeju Semiconductor Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jeju Semiconductor Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jeju Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innowireless and Jeju Semiconductor

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

The idea behind Innowireless Co and Jeju Semiconductor Corp 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.