Correlation Between Jeju Air and Sambo Corrugated
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Sambo Corrugated 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 Sambo Corrugated 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 Sambo Corrugated Board, you can compare the effects of market volatilities on Jeju Air and Sambo Corrugated 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 Sambo Corrugated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Sambo Corrugated.
Diversification Opportunities for Jeju Air and Sambo Corrugated
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jeju and Sambo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Sambo Corrugated Board in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sambo Corrugated Board 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 Sambo Corrugated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sambo Corrugated Board has no effect on the direction of Jeju Air i.e., Jeju Air and Sambo Corrugated go up and down completely randomly.
Pair Corralation between Jeju Air and Sambo Corrugated
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Sambo Corrugated. In addition to that, Jeju Air is 4.06 times more volatile than Sambo Corrugated Board. It trades about -0.24 of its total potential returns per unit of risk. Sambo Corrugated Board is currently generating about -0.13 per unit of volatility. If you would invest 828,000 in Sambo Corrugated Board on October 24, 2024 and sell it today you would lose (13,000) from holding Sambo Corrugated Board or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. Sambo Corrugated Board
Performance |
| Timeline |
| Jeju Air |
| Sambo Corrugated Board |
Jeju Air and Sambo Corrugated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Sambo Corrugated
The main advantage of trading using opposite Jeju Air and Sambo Corrugated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Sambo Corrugated 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 Sambo Corrugated will offset losses from the drop in Sambo Corrugated's long position.| Jeju Air vs. Samsung Life Insurance | Jeju Air vs. Seoul Food Industrial | Jeju Air vs. Kbi Metal Co | Jeju Air vs. Formetal Co |
| Sambo Corrugated vs. LAKE MATERIALS LTD | Sambo Corrugated vs. Tae Kyung Chemical | Sambo Corrugated vs. Shinhan Inverse Silver | Sambo Corrugated vs. RF Materials 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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