Correlation Between Jb Financial and Kumho Ind

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

By analyzing existing cross correlation between Jb Financial and Kumho Ind, you can compare the effects of market volatilities on Jb Financial and Kumho Ind 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 Jb Financial with a short position of Kumho Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jb Financial and Kumho Ind.

Diversification Opportunities for Jb Financial and Kumho Ind

-0.59

Correlation Coefficient

Jb Financial  Kumho Ind

Excellent diversification

The 3 months correlation between 175330 and Kumho is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Jb Financial and Kumho Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Ind and Jb Financial 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 Jb Financial are associated (or correlated) with Kumho Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Ind has no effect on the direction of Jb Financial i.e., Jb Financial and Kumho Ind go up and down completely randomly.

Pair Corralation between Jb Financial and Kumho Ind

Assuming the 90 days trading horizon Jb Financial is expected to generate 1.0 times more return on investment than Kumho Ind. However, Jb Financial is 1.0 times less risky than Kumho Ind. It trades about 0.08 of its potential returns per unit of risk. Kumho Ind is currently generating about -0.11 per unit of risk. If you would invest  1,312,339  in Jb Financial on September 27, 2024 and sell it today you would earn a total of  346,661  from holding Jb Financial or generate 26.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.38%
Values	Daily Returns

Jb Financial  vs.  Kumho Ind

Jb Financial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jb Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jb Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kumho Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kumho Ind 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 Jb Financial and Kumho Ind

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

The idea behind Jb Financial and Kumho Ind 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.