Correlation Between Jeju Semiconductor and Organic Tea

Can any of the company-specific risk be diversified away by investing in both Jeju Semiconductor and Organic Tea 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 Organic Tea 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 Organic Tea Cosmetics, you can compare the effects of market volatilities on Jeju Semiconductor and Organic Tea 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 Organic Tea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Semiconductor and Organic Tea.

Diversification Opportunities for Jeju Semiconductor and Organic Tea

0.0

Correlation Coefficient

Jeju Semiconductor  Organic Tea

Pay attention - limited upside

The 3 months correlation between Jeju and Organic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Organic Tea Cosmetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Tea Cosmetics 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 Organic Tea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Tea Cosmetics has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and Organic Tea go up and down completely randomly.

Pair Corralation between Jeju Semiconductor and Organic Tea

If you would invest  910,000  in Jeju Semiconductor Corp on December 24, 2024 and sell it today you would earn a total of  686,000  from holding Jeju Semiconductor Corp or generate 75.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.75%
Values	Daily Returns

Jeju Semiconductor Corp  vs.  Organic Tea Cosmetics

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.

Organic Tea Cosmetics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Jeju Semiconductor and Organic Tea

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

The idea behind Jeju Semiconductor Corp and Organic Tea Cosmetics 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.