Correlation Between Jeju Air and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Samsung Life 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 Samsung Life 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 Samsung Life, you can compare the effects of market volatilities on Jeju Air and Samsung Life 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 Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Samsung Life.
Diversification Opportunities for Jeju Air and Samsung Life
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jeju and Samsung is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Jeju Air i.e., Jeju Air and Samsung Life go up and down completely randomly.
Pair Corralation between Jeju Air and Samsung Life
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Samsung Life. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.14 times less risky than Samsung Life. The stock trades about -0.09 of its potential returns per unit of risk. The Samsung Life is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 9,630,000 in Samsung Life on October 26, 2024 and sell it today you would lose (1,270,000) from holding Samsung Life or give up 13.19% 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. Samsung Life
Performance |
| Timeline |
| Jeju Air |
| Samsung Life |
Jeju Air and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Samsung Life
The main advantage of trading using opposite Jeju Air and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life's long position.| Jeju Air vs. Samsung Electronics Co | Jeju Air vs. Samsung Electronics Co | Jeju Air vs. KB Financial Group | Jeju Air vs. Shinhan Financial Group |
| Samsung Life vs. HB Technology TD | Samsung Life vs. BIT Computer Co | Samsung Life vs. Air Busan Co | Samsung Life 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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