Correlation Between Jahwa Electron and ENERGYMACHINERY KOREA

Can any of the company-specific risk be diversified away by investing in both Jahwa Electron and ENERGYMACHINERY KOREA 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 Jahwa Electron and ENERGYMACHINERY KOREA into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Jahwa Electron and ENERGYMACHINERY KOREA

0.63

Correlation Coefficient

Jahwa Electron  ENERGYMACHINERY KOREA

Poor diversification

The 3 months correlation between Jahwa and ENERGYMACHINERY is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Jahwa Electron and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA and Jahwa Electron 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 Jahwa Electron are associated (or correlated) with ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Jahwa Electron i.e., Jahwa Electron and ENERGYMACHINERY KOREA go up and down completely randomly.

Pair Corralation between Jahwa Electron and ENERGYMACHINERY KOREA

Assuming the 90 days trading horizon Jahwa Electron is expected to under-perform the ENERGYMACHINERY KOREA. But the stock apears to be less risky and, when comparing its historical volatility, Jahwa Electron is 1.05 times less risky than ENERGYMACHINERY KOREA. The stock trades about -0.29 of its potential returns per unit of risk. The ENERGYMACHINERY KOREA CoLtd is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  220,000  in ENERGYMACHINERY KOREA CoLtd on September 3, 2024 and sell it today you would lose (38,300) from holding ENERGYMACHINERY KOREA CoLtd or give up 17.41% of portfolio value over 90 days.

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

Jahwa Electron  vs.  ENERGYMACHINERY KOREA CoLtd

Jahwa Electron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jahwa Electron 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.

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENERGYMACHINERY KOREA CoLtd 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.

Pair Trading with Jahwa Electron and ENERGYMACHINERY KOREA

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

The idea behind Jahwa Electron and ENERGYMACHINERY KOREA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.