Correlation Between Jeju Air and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Kukdong Oil 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 Kukdong Oil 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 Kukdong Oil Chemicals, you can compare the effects of market volatilities on Jeju Air and Kukdong Oil 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 Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Kukdong Oil.
Diversification Opportunities for Jeju Air and Kukdong Oil
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeju and Kukdong is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals 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 Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of Jeju Air i.e., Jeju Air and Kukdong Oil go up and down completely randomly.
Pair Corralation between Jeju Air and Kukdong Oil
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Kukdong Oil. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.43 times less risky than Kukdong Oil. The stock trades about -0.07 of its potential returns per unit of risk. The Kukdong Oil Chemicals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 327,504 in Kukdong Oil Chemicals on October 11, 2024 and sell it today you would earn a total of 22,496 from holding Kukdong Oil Chemicals or generate 6.87% 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. Kukdong Oil Chemicals
Performance |
| Timeline |
| Jeju Air |
| Kukdong Oil Chemicals |
Jeju Air and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Kukdong Oil
The main advantage of trading using opposite Jeju Air and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| Jeju Air vs. Lotte Data Communication | Jeju Air vs. Heungkuk Metaltech CoLtd | Jeju Air vs. Daejung Chemicals Metals | Jeju Air vs. Ssangyong Information Communication |
| Kukdong Oil vs. CU Medical Systems | Kukdong Oil vs. Sewoon Medical Co | Kukdong Oil vs. Shinsegae Food | Kukdong Oil vs. Jeju Air 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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