Correlation Between Jeju Air and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Seoul Food 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 Seoul Food 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 Seoul Food Industrial, you can compare the effects of market volatilities on Jeju Air and Seoul Food 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 Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Seoul Food.
Diversification Opportunities for Jeju Air and Seoul Food
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeju and Seoul is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial 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 Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Jeju Air i.e., Jeju Air and Seoul Food go up and down completely randomly.
Pair Corralation between Jeju Air and Seoul Food
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Seoul Food. In addition to that, Jeju Air is 1.28 times more volatile than Seoul Food Industrial. It trades about 0.0 of its total potential returns per unit of risk. Seoul Food Industrial is currently generating about 0.01 per unit of volatility. 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 |
Jeju Air Co vs. Seoul Food Industrial
Performance |
| Timeline |
| Jeju Air |
| Seoul Food Industrial |
Jeju Air and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Seoul Food
The main advantage of trading using opposite Jeju Air and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Jeju Air vs. Korea New Network | Jeju Air vs. Solution Advanced Technology | Jeju Air vs. Busan Industrial Co | Jeju Air vs. Busan Ind |
| Seoul Food vs. Samsung Electronics Co | Seoul Food vs. Samsung Electronics Co | Seoul Food vs. SK Hynix | Seoul Food vs. POSCO Holdings |
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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