Correlation Between Jeju Air and Sajo Seafood
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Sajo Seafood 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 Sajo Seafood 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 Sajo Seafood, you can compare the effects of market volatilities on Jeju Air and Sajo Seafood 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 Sajo Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Sajo Seafood.
Diversification Opportunities for Jeju Air and Sajo Seafood
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jeju and Sajo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Sajo Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sajo Seafood 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 Sajo Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sajo Seafood has no effect on the direction of Jeju Air i.e., Jeju Air and Sajo Seafood go up and down completely randomly.
Pair Corralation between Jeju Air and Sajo Seafood
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Sajo Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.69 times less risky than Sajo Seafood. The stock trades about -0.07 of its potential returns per unit of risk. The Sajo Seafood is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 509,000 in Sajo Seafood on October 13, 2024 and sell it today you would lose (48,000) from holding Sajo Seafood or give up 9.43% 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. Sajo Seafood
Performance |
| Timeline |
| Jeju Air |
| Sajo Seafood |
Jeju Air and Sajo Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Sajo Seafood
The main advantage of trading using opposite Jeju Air and Sajo Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Sajo Seafood 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 Sajo Seafood will offset losses from the drop in Sajo Seafood'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 |
| Sajo Seafood vs. Shinil Electronics Co | Sajo Seafood vs. Daewoo Electronic Components | Sajo Seafood vs. Hankukpackage Co | Sajo Seafood vs. Samji 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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