Correlation Between Tae Kyung and Jb Financial

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

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

Diversification Opportunities for Tae Kyung and Jb Financial

-0.08

Correlation Coefficient

Tae Kyung  Jb Financial

Good diversification

The 3 months correlation between Tae and 175330 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Jb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jb Financial and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Jb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jb Financial has no effect on the direction of Tae Kyung i.e., Tae Kyung and Jb Financial go up and down completely randomly.

Pair Corralation between Tae Kyung and Jb Financial

Assuming the 90 days trading horizon Tae Kyung Chemical is expected to under-perform the Jb Financial. But the stock apears to be less risky and, when comparing its historical volatility, Tae Kyung Chemical is 1.34 times less risky than Jb Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Jb Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,456,145  in Jb Financial on September 12, 2024 and sell it today you would earn a total of  332,855  from holding Jb Financial or generate 22.86% return on investment over 90 days.

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

Tae Kyung Chemical  vs.  Jb Financial

Tae Kyung Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jb Financial

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Tae Kyung and Jb Financial

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

The idea behind Tae Kyung Chemical and Jb Financial 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.