Correlation Between Jeju Air and LG Household
Can any of the company-specific risk be diversified away by investing in both Jeju Air and LG Household 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 LG Household 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 LG Household Healthcare, you can compare the effects of market volatilities on Jeju Air and LG Household 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 LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and LG Household.
Diversification Opportunities for Jeju Air and LG Household
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jeju and 051905 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare 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 LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Jeju Air i.e., Jeju Air and LG Household go up and down completely randomly.
Pair Corralation between Jeju Air and LG Household
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the LG Household. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.05 times less risky than LG Household. The stock trades about -0.06 of its potential returns per unit of risk. The LG Household Healthcare is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 16,080,000 in LG Household Healthcare on September 14, 2024 and sell it today you would lose (2,030,000) from holding LG Household Healthcare or give up 12.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. LG Household Healthcare
Performance |
| Timeline |
| Jeju Air |
| LG Household Healthcare |
Jeju Air and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and LG Household
The main advantage of trading using opposite Jeju Air and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household'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 |
| LG Household vs. LG Household Healthcare | LG Household vs. Amorepacific Corp | LG Household vs. Jayjun Co | LG Household vs. CKH Food Health |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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