Correlation Between Jeju Semiconductor and Dongbang Transport

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

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

Diversification Opportunities for Jeju Semiconductor and Dongbang Transport

0.83

Correlation Coefficient

Jeju Semiconductor  Dongbang Transport

Very poor diversification

The 3 months correlation between Jeju and Dongbang is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Jeju Semiconductor 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 Jeju Semiconductor Corp are associated (or correlated) with Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and Dongbang Transport go up and down completely randomly.

Pair Corralation between Jeju Semiconductor and Dongbang Transport

Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to generate 1.31 times more return on investment than Dongbang Transport. However, Jeju Semiconductor is 1.31 times more volatile than Dongbang Transport Logistics. It trades about 0.06 of its potential returns per unit of risk. Dongbang Transport Logistics is currently generating about 0.01 per unit of risk. If you would invest  388,500  in Jeju Semiconductor Corp on September 26, 2024 and sell it today you would earn a total of  521,500  from holding Jeju Semiconductor Corp or generate 134.23% return on investment over 90 days.

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

Jeju Semiconductor Corp  vs.  Dongbang Transport Logistics

Jeju Semiconductor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeju Semiconductor Corp 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dongbang Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongbang Transport Logistics 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jeju Semiconductor and Dongbang Transport

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

The idea behind Jeju Semiconductor Corp and Dongbang Transport Logistics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..