Correlation Between Seoul Food and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Jeju Air 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 Seoul Food and Jeju Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Jeju Air Co, you can compare the effects of market volatilities on Seoul Food and Jeju Air 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 Seoul Food with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Jeju Air.
Diversification Opportunities for Seoul Food and Jeju Air
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seoul and Jeju is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Jeju Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Air has no effect on the direction of Seoul Food i.e., Seoul Food and Jeju Air go up and down completely randomly.
Pair Corralation between Seoul Food and Jeju Air
Assuming the 90 days trading horizon Seoul Food Industrial is expected to generate 0.78 times more return on investment than Jeju Air. However, Seoul Food Industrial is 1.28 times less risky than Jeju Air. It trades about 0.01 of its potential returns per unit of risk. Jeju Air Co is currently generating about 0.0 per unit of risk. If you would invest 14,800 in Seoul Food Industrial on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Seoul Food Industrial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Jeju Air Co
Performance |
| Timeline |
| Seoul Food Industrial |
| Jeju Air |
Seoul Food and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Jeju Air
The main advantage of trading using opposite Seoul Food and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Jeju Air 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 Jeju Air will offset losses from the drop in Jeju Air's long position.| Seoul Food vs. Samsung Electronics Co | Seoul Food vs. Samsung Electronics Co | Seoul Food vs. SK Hynix | Seoul Food vs. POSCO Holdings |
| Jeju Air vs. Korea New Network | Jeju Air vs. Solution Advanced Technology | Jeju Air vs. Busan Industrial Co | Jeju Air vs. Busan Ind |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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