Correlation Between Jeju Air and Lee Ku
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Lee Ku 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 Lee Ku 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 Lee Ku Industrial, you can compare the effects of market volatilities on Jeju Air and Lee Ku 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 Lee Ku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Lee Ku.
Diversification Opportunities for Jeju Air and Lee Ku
Good diversification
The 3 months correlation between Jeju and Lee is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Lee Ku Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Ku 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 Lee Ku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Ku Industrial has no effect on the direction of Jeju Air i.e., Jeju Air and Lee Ku go up and down completely randomly.
Pair Corralation between Jeju Air and Lee Ku
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Lee Ku. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 2.06 times less risky than Lee Ku. The stock trades about -0.11 of its potential returns per unit of risk. The Lee Ku Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 396,000 in Lee Ku Industrial on November 9, 2024 and sell it today you would earn a total of 24,500 from holding Lee Ku Industrial or generate 6.19% 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. Lee Ku Industrial
Performance |
| Timeline |
| Jeju Air |
| Lee Ku Industrial |
Jeju Air and Lee Ku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Lee Ku
The main advantage of trading using opposite Jeju Air and Lee Ku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Lee Ku 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 Lee Ku will offset losses from the drop in Lee Ku'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 |
| Lee Ku vs. Daol Investment Securities | Lee Ku vs. Golden Bridge Investment | Lee Ku vs. Daejung Chemicals Metals | Lee Ku vs. Formetal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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