Correlation Between Jeong Moon and Samhyun Steel

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

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

Diversification Opportunities for Jeong Moon and Samhyun Steel

0.05

Correlation Coefficient

Jeong Moon  Samhyun Steel

Significant diversification

The 3 months correlation between Jeong and Samhyun is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jeong Moon Information and Samhyun Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhyun Steel and Jeong Moon 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 Jeong Moon Information are associated (or correlated) with Samhyun Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhyun Steel has no effect on the direction of Jeong Moon i.e., Jeong Moon and Samhyun Steel go up and down completely randomly.

Pair Corralation between Jeong Moon and Samhyun Steel

Assuming the 90 days trading horizon Jeong Moon Information is expected to under-perform the Samhyun Steel. In addition to that, Jeong Moon is 1.78 times more volatile than Samhyun Steel Co. It trades about -0.1 of its total potential returns per unit of risk. Samhyun Steel Co is currently generating about 0.02 per unit of volatility. If you would invest  471,000  in Samhyun Steel Co on September 26, 2024 and sell it today you would earn a total of  5,000  from holding Samhyun Steel Co or generate 1.06% return on investment over 90 days.

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

Jeong Moon Information  vs.  Samhyun Steel Co

Jeong Moon Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeong Moon Information 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.

Samhyun Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samhyun Steel Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samhyun Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jeong Moon and Samhyun Steel

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

The idea behind Jeong Moon Information and Samhyun Steel 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.

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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.