Correlation Between Jeil Steel and Samwha Electronics

Can any of the company-specific risk be diversified away by investing in both Jeil Steel and Samwha Electronics 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 Jeil Steel and Samwha Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jeil Steel Mfg and Samwha Electronics Co, you can compare the effects of market volatilities on Jeil Steel and Samwha Electronics 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 Jeil Steel with a short position of Samwha Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeil Steel and Samwha Electronics.

Diversification Opportunities for Jeil Steel and Samwha Electronics

-0.48

Correlation Coefficient

Jeil Steel  Samwha Electronics

Very good diversification

The 3 months correlation between Jeil and Samwha is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jeil Steel Mfg and Samwha Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samwha Electronics and Jeil Steel 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 Jeil Steel Mfg are associated (or correlated) with Samwha Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samwha Electronics has no effect on the direction of Jeil Steel i.e., Jeil Steel and Samwha Electronics go up and down completely randomly.

Pair Corralation between Jeil Steel and Samwha Electronics

Assuming the 90 days trading horizon Jeil Steel Mfg is expected to generate 1.02 times more return on investment than Samwha Electronics. However, Jeil Steel is 1.02 times more volatile than Samwha Electronics Co. It trades about 0.15 of its potential returns per unit of risk. Samwha Electronics Co is currently generating about 0.03 per unit of risk. If you would invest  128,000  in Jeil Steel Mfg on September 3, 2024 and sell it today you would earn a total of  51,000  from holding Jeil Steel Mfg or generate 39.84% return on investment over 90 days.

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

Jeil Steel Mfg  vs.  Samwha Electronics Co

Jeil Steel Mfg

Risk-Adjusted Performance

11 of 100

Good

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

Samwha Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samwha Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samwha Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jeil Steel and Samwha Electronics

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

The idea behind Jeil Steel Mfg and Samwha Electronics Co 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.