Correlation Between Jeju Air and Alton Sports
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on Jeju Air and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Alton Sports.
Diversification Opportunities for Jeju Air and Alton Sports
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeju and Alton is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Jeju Air i.e., Jeju Air and Alton Sports go up and down completely randomly.
Pair Corralation between Jeju Air and Alton Sports
Assuming the 90 days trading horizon Jeju Air Co is expected to generate 0.87 times more return on investment than Alton Sports. However, Jeju Air Co is 1.15 times less risky than Alton Sports. It trades about -0.06 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.17 per unit of risk. If you would invest 1,200,000 in Jeju Air Co on September 12, 2024 and sell it today you would lose (314,000) from holding Jeju Air Co or give up 26.17% 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. Alton Sports CoLtd
Performance |
| Timeline |
| Jeju Air |
| Alton Sports CoLtd |
Jeju Air and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Alton Sports
The main advantage of trading using opposite Jeju Air and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' 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 |
| Alton Sports vs. Daou Data Corp | Alton Sports vs. Solution Advanced Technology | Alton Sports vs. Busan Industrial Co | Alton Sports vs. Busan Ind |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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