Correlation Between Jeju Beer and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Jeju Beer and Korea Computer 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 Beer and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Beer Co and Korea Computer Terminal, you can compare the effects of market volatilities on Jeju Beer and Korea Computer 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 Beer with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Beer and Korea Computer.
Diversification Opportunities for Jeju Beer and Korea Computer
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jeju and Korea is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and Korea Computer Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Terminal and Jeju Beer 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 Beer Co are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Terminal has no effect on the direction of Jeju Beer i.e., Jeju Beer and Korea Computer go up and down completely randomly.
Pair Corralation between Jeju Beer and Korea Computer
Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the Korea Computer. In addition to that, Jeju Beer is 1.47 times more volatile than Korea Computer Terminal. It trades about -0.04 of its total potential returns per unit of risk. Korea Computer Terminal is currently generating about -0.02 per unit of volatility. If you would invest 364,589 in Korea Computer Terminal on September 12, 2024 and sell it today you would lose (128,089) from holding Korea Computer Terminal or give up 35.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Beer Co vs. Korea Computer Terminal
Performance |
| Timeline |
| Jeju Beer |
| Korea Computer Terminal |
Jeju Beer and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Beer and Korea Computer
The main advantage of trading using opposite Jeju Beer and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Beer position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
| Korea Computer vs. Songwon Industrial Co | Korea Computer vs. LG Display Co | Korea Computer vs. Daejung Chemicals Metals | Korea Computer vs. Seoul Food Industrial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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