Correlation Between Jeju Beer and DYPNF CoLtd

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

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

Diversification Opportunities for Jeju Beer and DYPNF CoLtd

-0.06

Correlation Coefficient

Jeju Beer  DYPNF CoLtd

Good diversification

The 3 months correlation between Jeju and DYPNF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and DYPNF CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DYPNF CoLtd and Jeju Beer 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 Beer Co are associated (or correlated) with DYPNF CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DYPNF CoLtd has no effect on the direction of Jeju Beer i.e., Jeju Beer and DYPNF CoLtd go up and down completely randomly.

Pair Corralation between Jeju Beer and DYPNF CoLtd

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the DYPNF CoLtd. In addition to that, Jeju Beer is 1.23 times more volatile than DYPNF CoLtd. It trades about -0.09 of its total potential returns per unit of risk. DYPNF CoLtd is currently generating about 0.15 per unit of volatility. If you would invest  1,136,000  in DYPNF CoLtd on December 2, 2024 and sell it today you would earn a total of  309,000  from holding DYPNF CoLtd or generate 27.2% return on investment over 90 days.

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

Jeju Beer Co  vs.  DYPNF CoLtd

Jeju Beer

Risk-Adjusted Performance

Very Weak

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

DYPNF CoLtd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DYPNF CoLtd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DYPNF CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeju Beer and DYPNF CoLtd

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

The idea behind Jeju Beer Co and DYPNF CoLtd 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.