Correlation Between Incar Financial and Jeju Bank

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

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

Diversification Opportunities for Incar Financial and Jeju Bank

-0.68

Correlation Coefficient

Incar Financial  Jeju Bank

Excellent diversification

The 3 months correlation between Incar and Jeju is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and Incar 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 Incar Financial Service 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 Incar Financial i.e., Incar Financial and Jeju Bank go up and down completely randomly.

Pair Corralation between Incar Financial and Jeju Bank

Assuming the 90 days trading horizon Incar Financial Service is expected to generate 2.71 times more return on investment than Jeju Bank. However, Incar Financial is 2.71 times more volatile than Jeju Bank. It trades about 0.16 of its potential returns per unit of risk. Jeju Bank is currently generating about -0.18 per unit of risk. If you would invest  561,000  in Incar Financial Service on December 30, 2024 and sell it today you would earn a total of  146,000  from holding Incar Financial Service or generate 26.02% return on investment over 90 days.

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

Incar Financial Service  vs.  Jeju Bank

Incar Financial Service

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Incar Financial Service are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Incar Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Jeju Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeju Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Incar Financial and Jeju Bank

The main advantage of trading using opposite Incar Financial and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incar Financial 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 Incar Financial Service 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.