Correlation Between Industrial Bank and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Industrial Bank 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 Industrial Bank and Jeju Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Jeju Air Co, you can compare the effects of market volatilities on Industrial Bank 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 Industrial Bank with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Jeju Air.
Diversification Opportunities for Industrial Bank and Jeju Air
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and Jeju is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air and Industrial Bank 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 Industrial Bank 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 Industrial Bank i.e., Industrial Bank and Jeju Air go up and down completely randomly.
Pair Corralation between Industrial Bank and Jeju Air
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.64 times more return on investment than Jeju Air. However, Industrial Bank is 1.57 times less risky than Jeju Air. It trades about 0.1 of its potential returns per unit of risk. Jeju Air Co is currently generating about -0.08 per unit of risk. If you would invest 950,271 in Industrial Bank on October 30, 2024 and sell it today you would earn a total of 556,729 from holding Industrial Bank or generate 58.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Jeju Air Co
Performance |
| Timeline |
| Industrial Bank |
| Jeju Air |
Industrial Bank and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Jeju Air
The main advantage of trading using opposite Industrial Bank and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank 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.| Industrial Bank vs. BIT Computer Co | Industrial Bank vs. V One Tech Co | Industrial Bank vs. KMH Hitech Co | Industrial Bank vs. Dongwoon Anatech Co |
| Jeju Air vs. Daewon Chemical Co | Jeju Air vs. E Investment Development | Jeju Air vs. Hanwha Chemical Corp | Jeju Air vs. KTB Investment Securities |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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