Correlation Between Jeju Air and PLAYWITH
Can any of the company-specific risk be diversified away by investing in both Jeju Air and PLAYWITH 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 PLAYWITH 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 PLAYWITH, you can compare the effects of market volatilities on Jeju Air and PLAYWITH 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 PLAYWITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and PLAYWITH.
Diversification Opportunities for Jeju Air and PLAYWITH
Very poor diversification
The 3 months correlation between Jeju and PLAYWITH is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH 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 PLAYWITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWITH has no effect on the direction of Jeju Air i.e., Jeju Air and PLAYWITH go up and down completely randomly.
Pair Corralation between Jeju Air and PLAYWITH
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the PLAYWITH. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.82 times less risky than PLAYWITH. The stock trades about -0.11 of its potential returns per unit of risk. The PLAYWITH is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 566,000 in PLAYWITH on November 9, 2024 and sell it today you would lose (245,000) from holding PLAYWITH or give up 43.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. PLAYWITH
Performance |
| Timeline |
| Jeju Air |
| PLAYWITH |
Jeju Air and PLAYWITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and PLAYWITH
The main advantage of trading using opposite Jeju Air and PLAYWITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, PLAYWITH 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 PLAYWITH will offset losses from the drop in PLAYWITH's long position.| Jeju Air vs. Daishin Information Communications | Jeju Air vs. Polaris Office Corp | Jeju Air vs. KB Financial Group | Jeju Air vs. Lotte Non Life Insurance |
| PLAYWITH vs. Korea Alcohol Industrial | PLAYWITH vs. Miwon Chemicals Co | PLAYWITH vs. Asiana Airlines | PLAYWITH vs. FNSTech 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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