Correlation Between Jeju Air and Korea New
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Korea New 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 Korea New 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 Korea New Network, you can compare the effects of market volatilities on Jeju Air and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Korea New.
Diversification Opportunities for Jeju Air and Korea New
Very weak diversification
The 3 months correlation between Jeju and Korea is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Jeju Air i.e., Jeju Air and Korea New go up and down completely randomly.
Pair Corralation between Jeju Air and Korea New
Assuming the 90 days trading horizon Jeju Air Co is expected to generate 1.13 times more return on investment than Korea New. However, Jeju Air is 1.13 times more volatile than Korea New Network. It trades about 0.08 of its potential returns per unit of risk. Korea New Network is currently generating about 0.03 per unit of risk. If you would invest 901,000 in Jeju Air Co on August 30, 2024 and sell it today you would earn a total of 55,000 from holding Jeju Air Co or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. Korea New Network
Performance |
| Timeline |
| Jeju Air |
| Korea New Network |
Jeju Air and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Korea New
The main advantage of trading using opposite Jeju Air and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New'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 |
| Korea New vs. GS Engineering Construction | Korea New vs. Hankook Furniture Co | Korea New vs. WooDeumGee Farm Co, | Korea New vs. Shinhan Inverse Silver |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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