Correlation Between Seoul Electronics and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics 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 Electronics 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 Electronics Telecom and Jeju Air Co, you can compare the effects of market volatilities on Seoul Electronics 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 Electronics with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Jeju Air.
Diversification Opportunities for Seoul Electronics and Jeju Air
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seoul and Jeju is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom 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 Electronics 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 Electronics Telecom 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 Electronics i.e., Seoul Electronics and Jeju Air go up and down completely randomly.
Pair Corralation between Seoul Electronics and Jeju Air
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to under-perform the Jeju Air. In addition to that, Seoul Electronics is 1.02 times more volatile than Jeju Air Co. It trades about -0.09 of its total potential returns per unit of risk. Jeju Air Co is currently generating about -0.09 per unit of volatility. If you would invest 912,000 in Jeju Air Co on November 2, 2024 and sell it today you would lose (167,000) from holding Jeju Air Co or give up 18.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. Jeju Air Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Jeju Air |
Seoul Electronics and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Jeju Air
The main advantage of trading using opposite Seoul Electronics and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics 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 Electronics vs. Kaonmedia Co | Seoul Electronics vs. SAMG Entertainment Co | Seoul Electronics vs. Korea Shipbuilding Offshore | Seoul Electronics vs. Korea Investment Holdings |
| Jeju Air vs. Display Tech Co | Jeju Air vs. Lee Ku Industrial | Jeju Air vs. LEENO Industrial | Jeju Air vs. Nice Information Telecommunication |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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