Correlation Between Jeju Air and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Moonbae Steel 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 Moonbae Steel 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 Moonbae Steel, you can compare the effects of market volatilities on Jeju Air and Moonbae Steel 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 Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Moonbae Steel.
Diversification Opportunities for Jeju Air and Moonbae Steel
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jeju and Moonbae is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Jeju Air i.e., Jeju Air and Moonbae Steel go up and down completely randomly.
Pair Corralation between Jeju Air and Moonbae Steel
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Moonbae Steel. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.14 times less risky than Moonbae Steel. The stock trades about -0.11 of its potential returns per unit of risk. The Moonbae Steel is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 291,000 in Moonbae Steel on October 17, 2024 and sell it today you would lose (58,500) from holding Moonbae Steel or give up 20.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. Moonbae Steel
Performance |
| Timeline |
| Jeju Air |
| Moonbae Steel |
Jeju Air and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Moonbae Steel
The main advantage of trading using opposite Jeju Air and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Moonbae Steel 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| Jeju Air vs. Duksan Hi Metal | Jeju Air vs. Kbi Metal Co | Jeju Air vs. Industrial Bank | Jeju Air vs. DB Financial Investment |
| Moonbae Steel vs. Jeju Air Co | Moonbae Steel vs. TOPMATERIAL LTD | Moonbae Steel vs. LAKE MATERIALS LTD | Moonbae Steel vs. Ecoplastic |
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 Stocks Directory module to find actively traded stocks across global markets.
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