Correlation Between Jeju Air and Seojin Automotive
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Seojin Automotive 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 Seojin Automotive 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 Seojin Automotive CoLtd, you can compare the effects of market volatilities on Jeju Air and Seojin Automotive 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 Seojin Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Seojin Automotive.
Diversification Opportunities for Jeju Air and Seojin Automotive
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeju and Seojin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Seojin Automotive CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin Automotive CoLtd 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 Seojin Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin Automotive CoLtd has no effect on the direction of Jeju Air i.e., Jeju Air and Seojin Automotive go up and down completely randomly.
Pair Corralation between Jeju Air and Seojin Automotive
Assuming the 90 days trading horizon Jeju Air Co is expected to generate 0.78 times more return on investment than Seojin Automotive. However, Jeju Air Co is 1.28 times less risky than Seojin Automotive. It trades about -0.05 of its potential returns per unit of risk. Seojin Automotive CoLtd is currently generating about -0.1 per unit of risk. If you would invest 1,163,000 in Jeju Air Co on September 14, 2024 and sell it today you would lose (274,000) from holding Jeju Air Co or give up 23.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.62% |
| Values | Daily Returns |
Jeju Air Co vs. Seojin Automotive CoLtd
Performance |
| Timeline |
| Jeju Air |
| Seojin Automotive CoLtd |
Jeju Air and Seojin Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Seojin Automotive
The main advantage of trading using opposite Jeju Air and Seojin Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Seojin Automotive 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 Seojin Automotive will offset losses from the drop in Seojin Automotive'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 |
| Seojin Automotive vs. Lion Chemtech Co | Seojin Automotive vs. PH Tech Co | Seojin Automotive vs. Jeju Air Co | Seojin Automotive vs. Korea Investment Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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