Correlation Between Jeju Semiconductor and UIL

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

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

Diversification Opportunities for Jeju Semiconductor and UIL

0.79

Correlation Coefficient

Jeju Semiconductor  UIL

Poor diversification

The 3 months correlation between Jeju and UIL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and UIL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UIL Co and Jeju Semiconductor 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 Semiconductor Corp are associated (or correlated) with UIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UIL Co has no effect on the direction of Jeju Semiconductor i.e., Jeju Semiconductor and UIL go up and down completely randomly.

Pair Corralation between Jeju Semiconductor and UIL

Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to under-perform the UIL. In addition to that, Jeju Semiconductor is 1.15 times more volatile than UIL Co. It trades about -0.13 of its total potential returns per unit of risk. UIL Co is currently generating about -0.01 per unit of volatility. If you would invest  532,000  in UIL Co on September 15, 2024 and sell it today you would lose (20,000) from holding UIL Co or give up 3.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Jeju Semiconductor Corp  vs.  UIL Co

Jeju Semiconductor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeju Semiconductor Corp 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.

UIL Co

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jeju Semiconductor and UIL

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

The idea behind Jeju Semiconductor Corp and UIL 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .