Correlation Between Jeju Air and Youl Chon
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Youl Chon 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 Youl Chon 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 Youl Chon Chemical, you can compare the effects of market volatilities on Jeju Air and Youl Chon 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 Youl Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Youl Chon.
Diversification Opportunities for Jeju Air and Youl Chon
Very good diversification
The 3 months correlation between Jeju and Youl is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Youl Chon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youl Chon 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 Youl Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youl Chon Chemical has no effect on the direction of Jeju Air i.e., Jeju Air and Youl Chon go up and down completely randomly.
Pair Corralation between Jeju Air and Youl Chon
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Youl Chon. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 4.99 times less risky than Youl Chon. The stock trades about -0.13 of its potential returns per unit of risk. The Youl Chon Chemical is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 2,185,000 in Youl Chon Chemical on November 6, 2024 and sell it today you would earn a total of 875,000 from holding Youl Chon Chemical or generate 40.05% 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. Youl Chon Chemical
Performance |
| Timeline |
| Jeju Air |
| Youl Chon Chemical |
Jeju Air and Youl Chon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Youl Chon
The main advantage of trading using opposite Jeju Air and Youl Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Youl Chon 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 Youl Chon will offset losses from the drop in Youl Chon's long position.| Jeju Air vs. Daiyang Metal Co | Jeju Air vs. Hanjoo Light Metal | Jeju Air vs. PJ Metal Co | Jeju Air vs. Coloray International Investment |
| Youl Chon vs. Seoul Food Industrial | Youl Chon vs. Songwon Industrial Co | Youl Chon vs. Daelim Industrial Co | Youl Chon vs. GS Retail Co |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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