Correlation Between Jeju Air and SIMMTECH
Can any of the company-specific risk be diversified away by investing in both Jeju Air and SIMMTECH 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 SIMMTECH 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 SIMMTECH Co, you can compare the effects of market volatilities on Jeju Air and SIMMTECH 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 SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and SIMMTECH.
Diversification Opportunities for Jeju Air and SIMMTECH
Good diversification
The 3 months correlation between Jeju and SIMMTECH is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH 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 SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of Jeju Air i.e., Jeju Air and SIMMTECH go up and down completely randomly.
Pair Corralation between Jeju Air and SIMMTECH
Assuming the 90 days trading horizon Jeju Air Co is expected to generate 0.7 times more return on investment than SIMMTECH. However, Jeju Air Co is 1.43 times less risky than SIMMTECH. It trades about 0.15 of its potential returns per unit of risk. SIMMTECH Co is currently generating about -0.57 per unit of risk. If you would invest 916,000 in Jeju Air Co on September 2, 2024 and sell it today you would earn a total of 62,000 from holding Jeju Air Co or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Air Co vs. SIMMTECH Co
Performance |
| Timeline |
| Jeju Air |
| SIMMTECH |
Jeju Air and SIMMTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Air and SIMMTECH
The main advantage of trading using opposite Jeju Air and SIMMTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, SIMMTECH 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 SIMMTECH will offset losses from the drop in SIMMTECH's long position.| Jeju Air vs. Korea New Network | Jeju Air vs. ICD Co | Jeju Air vs. DYPNF CoLtd | Jeju Air vs. Busan Industrial Co |
| SIMMTECH vs. Lotte Data Communication | SIMMTECH vs. Daishin Information Communications | SIMMTECH vs. Koryo Credit Information | SIMMTECH vs. Korea Information Communications |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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