Correlation Between Jin Air and RPBio
Can any of the company-specific risk be diversified away by investing in both Jin Air and RPBio 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 Jin Air and RPBio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and RPBio Inc, you can compare the effects of market volatilities on Jin Air and RPBio 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 Jin Air with a short position of RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and RPBio.
Diversification Opportunities for Jin Air and RPBio
Very weak diversification
The 3 months correlation between Jin and RPBio is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio Inc and Jin 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 Jin Air Co are associated (or correlated) with RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of Jin Air i.e., Jin Air and RPBio go up and down completely randomly.
Pair Corralation between Jin Air and RPBio
Assuming the 90 days trading horizon Jin Air Co is expected to under-perform the RPBio. But the stock apears to be less risky and, when comparing its historical volatility, Jin Air Co is 1.23 times less risky than RPBio. The stock trades about -0.06 of its potential returns per unit of risk. The RPBio Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 536,000 in RPBio Inc on November 9, 2024 and sell it today you would lose (9,000) from holding RPBio Inc or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jin Air Co vs. RPBio Inc
Performance |
| Timeline |
| Jin Air |
| RPBio Inc |
Jin Air and RPBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jin Air and RPBio
The main advantage of trading using opposite Jin Air and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio's long position.| Jin Air vs. SM Entertainment Co | Jin Air vs. SKONEC Entertainment Co | Jin Air vs. Jeju Beer Co | Jin Air vs. Worldex Industry Trading |
| RPBio vs. Aprogen Healthcare Games | RPBio vs. Sung Bo Chemicals | RPBio vs. Chorokbaem Healthcare Co | RPBio vs. Seoul Electronics Telecom |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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