Correlation Between Genie Music and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Genie Music 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 Genie Music and Jeju Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Jeju Air Co, you can compare the effects of market volatilities on Genie Music 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 Genie Music with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Jeju Air.
Diversification Opportunities for Genie Music and Jeju Air
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Genie and Jeju is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air and Genie Music 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 Genie Music 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 Genie Music i.e., Genie Music and Jeju Air go up and down completely randomly.
Pair Corralation between Genie Music and Jeju Air
Assuming the 90 days trading horizon Genie Music is expected to generate 1.47 times more return on investment than Jeju Air. However, Genie Music is 1.47 times more volatile than Jeju Air Co. 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 208,500 in Genie Music on September 14, 2024 and sell it today you would lose (500.00) from holding Genie Music or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Music vs. Jeju Air Co
Performance |
| Timeline |
| Genie Music |
| Jeju Air |
Genie Music and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Music and Jeju Air
The main advantage of trading using opposite Genie Music and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music 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.| Genie Music vs. WooDeumGee Farm Co, | Genie Music vs. Dongwoo Farm To | Genie Music vs. SungMoon Electronics Co | Genie Music vs. Cuckoo Electronics Co |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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