Correlation Between Jeju Beer and Mercury
Can any of the company-specific risk be diversified away by investing in both Jeju Beer and Mercury 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 Mercury 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 Mercury, you can compare the effects of market volatilities on Jeju Beer and Mercury 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 Mercury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Beer and Mercury.
Diversification Opportunities for Jeju Beer and Mercury
Good diversification
The 3 months correlation between Jeju and Mercury is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and Mercury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury 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 Mercury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury has no effect on the direction of Jeju Beer i.e., Jeju Beer and Mercury go up and down completely randomly.
Pair Corralation between Jeju Beer and Mercury
Assuming the 90 days trading horizon Jeju Beer Co is expected to generate 0.76 times more return on investment than Mercury. However, Jeju Beer Co is 1.32 times less risky than Mercury. It trades about 0.13 of its potential returns per unit of risk. Mercury is currently generating about 0.09 per unit of risk. If you would invest 297,000 in Jeju Beer Co on September 2, 2024 and sell it today you would earn a total of 28,000 from holding Jeju Beer Co or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Beer Co vs. Mercury
Performance |
| Timeline |
| Jeju Beer |
| Mercury |
Jeju Beer and Mercury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Beer and Mercury
The main advantage of trading using opposite Jeju Beer and Mercury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Beer position performs unexpectedly, Mercury 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 Mercury will offset losses from the drop in Mercury's long position.| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
| Mercury vs. Iljin Display | Mercury vs. Nable Communications | Mercury vs. Korea Information Communications | Mercury vs. Jeju Beer 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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