Correlation Between Vina Technology and Jeju Bank

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

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

Diversification Opportunities for Vina Technology and Jeju Bank

0.55

Correlation Coefficient

Vina Technology  Jeju Bank

Very weak diversification

The 3 months correlation between Vina and Jeju is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vina Technology Co and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Vina Technology 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 Vina Technology Co 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 Vina Technology i.e., Vina Technology and Jeju Bank go up and down completely randomly.

Pair Corralation between Vina Technology and Jeju Bank

Assuming the 90 days trading horizon Vina Technology Co is expected to under-perform the Jeju Bank. In addition to that, Vina Technology is 1.28 times more volatile than Jeju Bank. It trades about -0.08 of its total potential returns per unit of risk. Jeju Bank is currently generating about 0.06 per unit of volatility. If you would invest  772,000  in Jeju Bank on October 27, 2024 and sell it today you would earn a total of  18,000  from holding Jeju Bank or generate 2.33% return on investment over 90 days.

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

Vina Technology Co  vs.  Jeju Bank

Vina Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vina Technology Co 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.

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 Vina Technology and Jeju Bank

The main advantage of trading using opposite Vina Technology and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vina Technology 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 Vina Technology Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.