Correlation Between Jeju Air and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on Jeju Air and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Lion Chemtech.
Diversification Opportunities for Jeju Air and Lion Chemtech
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jeju and Lion is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Jeju Air i.e., Jeju Air and Lion Chemtech go up and down completely randomly.
Pair Corralation between Jeju Air and Lion Chemtech
Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Lion Chemtech. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Air Co is 1.42 times less risky than Lion Chemtech. The stock trades about -0.24 of its potential returns per unit of risk. The Lion Chemtech Co is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 277,045 in Lion Chemtech Co on October 20, 2024 and sell it today you would lose (27,545) from holding Lion Chemtech Co or give up 9.94% 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. Lion Chemtech Co
Performance |
| Timeline |
| Jeju Air |
| Lion Chemtech |
Jeju Air and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and Lion Chemtech
The main advantage of trading using opposite Jeju Air and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Jeju Air vs. Hyundai Industrial Co | Jeju Air vs. Asiana Airlines | Jeju Air vs. Ilji Technology Co | Jeju Air vs. DRB Industrial Co |
| Lion Chemtech vs. RFTech Co | Lion Chemtech vs. Shinhan Inverse Silver | Lion Chemtech vs. Hanmi Semiconductor Co | Lion Chemtech vs. A Tech Solution 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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