Correlation Between Jeju Air and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Busan Industrial 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 Busan Industrial 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 Busan Industrial Co, you can compare the effects of market volatilities on Jeju Air and Busan Industrial 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Busan Industrial.
Diversification Opportunities for Jeju Air and Busan Industrial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jeju and Busan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Jeju Air i.e., Jeju Air and Busan Industrial go up and down completely randomly.
Pair Corralation between Jeju Air and Busan Industrial
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.48 times less risky than Busan Industrial. The stock trades about -0.07 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,584,240 in Busan Industrial Co on October 13, 2024 and sell it today you would earn a total of 105,760 from holding Busan Industrial Co or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. Busan Industrial Co
Performance |
| Timeline |
| Jeju Air |
| Busan Industrial |
Jeju Air and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Busan Industrial
The main advantage of trading using opposite Jeju Air and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Jeju Air vs. Jinro Distillers Co | Jeju Air vs. Alton Sports CoLtd | Jeju Air vs. Korea Alcohol Industrial | Jeju Air vs. Samyang Foods Co |
| Busan Industrial vs. Seoul Electronics Telecom | Busan Industrial vs. Jeju Air Co | Busan Industrial vs. Green Cross Medical | Busan Industrial vs. Cuckoo Electronics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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