Correlation Between Jeju Air and SH Energy
Can any of the company-specific risk be diversified away by investing in both Jeju Air and SH Energy 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 Air and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Air Co and SH Energy Chemical, you can compare the effects of market volatilities on Jeju Air and SH Energy 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 Air with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and SH Energy.
Diversification Opportunities for Jeju Air and SH Energy
Significant diversification
The 3 months correlation between Jeju and 002360 is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Jeju Air 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 Air Co are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Jeju Air i.e., Jeju Air and SH Energy go up and down completely randomly.
Pair Corralation between Jeju Air and SH Energy
Assuming the 90 days trading horizon Jeju Air is expected to generate 2.54 times less return on investment than SH Energy. But when comparing it to its historical volatility, Jeju Air Co is 2.0 times less risky than SH Energy. It trades about 0.05 of its potential returns per unit of risk. SH Energy Chemical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 50,900 in SH Energy Chemical on September 3, 2024 and sell it today you would earn a total of 1,800 from holding SH Energy Chemical or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. SH Energy Chemical
Performance |
| Timeline |
| Jeju Air |
| SH Energy Chemical |
Jeju Air and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and SH Energy
The main advantage of trading using opposite Jeju Air and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| Jeju Air vs. LG Display | Jeju Air vs. Hyundai Motor | Jeju Air vs. Hyundai Motor Co | Jeju Air vs. Hyundai Motor Co |
| SH Energy vs. AptaBio Therapeutics | SH Energy vs. Daewoo SBI SPAC | SH Energy vs. Dream Security co | SH Energy vs. Microfriend |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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