Correlation Between Jeju Air and KEYEASTCoLtd
Can any of the company-specific risk be diversified away by investing in both Jeju Air and KEYEASTCoLtd 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 KEYEASTCoLtd 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 KEYEASTCoLtd, you can compare the effects of market volatilities on Jeju Air and KEYEASTCoLtd 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 KEYEASTCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and KEYEASTCoLtd.
Diversification Opportunities for Jeju Air and KEYEASTCoLtd
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jeju and KEYEASTCoLtd is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and KEYEASTCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYEASTCoLtd 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 KEYEASTCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYEASTCoLtd has no effect on the direction of Jeju Air i.e., Jeju Air and KEYEASTCoLtd go up and down completely randomly.
Pair Corralation between Jeju Air and KEYEASTCoLtd
Assuming the 90 days trading horizon Jeju Air Co is expected to generate 1.03 times more return on investment than KEYEASTCoLtd. However, Jeju Air is 1.03 times more volatile than KEYEASTCoLtd. It trades about 0.07 of its potential returns per unit of risk. KEYEASTCoLtd is currently generating about -0.02 per unit of risk. If you would invest 882,000 in Jeju Air Co on August 25, 2024 and sell it today you would earn a total of 27,000 from holding Jeju Air Co or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Jeju Air Co vs. KEYEASTCoLtd
Performance |
| Timeline |
| Jeju Air |
| KEYEASTCoLtd |
Jeju Air and KEYEASTCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and KEYEASTCoLtd
The main advantage of trading using opposite Jeju Air and KEYEASTCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, KEYEASTCoLtd 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 KEYEASTCoLtd will offset losses from the drop in KEYEASTCoLtd's long position.| Jeju Air vs. Lotte Data Communication | Jeju Air vs. Duksan Hi Metal | Jeju Air vs. Daiyang Metal Co | Jeju Air vs. Digital Power Communications |
| KEYEASTCoLtd vs. Kukdong Oil Chemicals | KEYEASTCoLtd vs. SK Chemicals Co | KEYEASTCoLtd vs. Zaram Technology | KEYEASTCoLtd 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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