Correlation Between Jeju Air and Genie Music
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Genie Music 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 Genie Music 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 Genie Music, you can compare the effects of market volatilities on Jeju Air and Genie Music 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 Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Genie Music.
Diversification Opportunities for Jeju Air and Genie Music
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jeju and Genie is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music 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 Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Jeju Air i.e., Jeju Air and Genie Music go up and down completely randomly.
Pair Corralation between Jeju Air and Genie Music
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Genie Music. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.47 times less risky than Genie Music. The stock trades about 0.0 of its potential returns per unit of risk. The Genie Music is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 208,500 in Genie Music on September 14, 2024 and sell it today you would lose (500.00) from holding Genie Music or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. Genie Music
Performance |
| Timeline |
| Jeju Air |
| Genie Music |
Jeju Air and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Genie Music
The main advantage of trading using opposite Jeju Air and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.| Jeju Air vs. Korea New Network | Jeju Air vs. Solution Advanced Technology | Jeju Air vs. Busan Industrial Co | Jeju Air vs. Busan Ind |
| Genie Music vs. WooDeumGee Farm Co, | Genie Music vs. Dongwoo Farm To | Genie Music vs. SungMoon Electronics Co | Genie Music vs. Cuckoo 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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