Correlation Between Jeju Air and Miwon Chemicals
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Miwon Chemicals 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 Miwon Chemicals 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 Miwon Chemicals Co, you can compare the effects of market volatilities on Jeju Air and Miwon Chemicals 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 Miwon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Miwon Chemicals.
Diversification Opportunities for Jeju Air and Miwon Chemicals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jeju and Miwon is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Miwon Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemicals 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 Miwon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemicals has no effect on the direction of Jeju Air i.e., Jeju Air and Miwon Chemicals go up and down completely randomly.
Pair Corralation between Jeju Air and Miwon Chemicals
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Miwon Chemicals. In addition to that, Jeju Air is 2.08 times more volatile than Miwon Chemicals Co. It trades about -0.07 of its total potential returns per unit of risk. Miwon Chemicals Co is currently generating about 0.06 per unit of volatility. If you would invest 6,005,767 in Miwon Chemicals Co on October 13, 2024 and sell it today you would earn a total of 1,874,233 from holding Miwon Chemicals Co or generate 31.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. Miwon Chemicals Co
Performance |
| Timeline |
| Jeju Air |
| Miwon Chemicals |
Jeju Air and Miwon Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Miwon Chemicals
The main advantage of trading using opposite Jeju Air and Miwon Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Miwon Chemicals 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 Miwon Chemicals will offset losses from the drop in Miwon Chemicals' long position.| Jeju Air vs. Jinro Distillers Co | Jeju Air vs. Alton Sports CoLtd | Jeju Air vs. Korea Alcohol Industrial | Jeju Air vs. Samyang Foods Co |
| Miwon Chemicals vs. Kolon Plastics | Miwon Chemicals vs. Korea Air Svc | Miwon Chemicals vs. Jeju Air Co | Miwon Chemicals vs. WONIK Materials CoLtd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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