Correlation Between Jeju Beer and N2Tech
Can any of the company-specific risk be diversified away by investing in both Jeju Beer and N2Tech 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 N2Tech 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 N2Tech Co, you can compare the effects of market volatilities on Jeju Beer and N2Tech 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 N2Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Beer and N2Tech.
Diversification Opportunities for Jeju Beer and N2Tech
Very weak diversification
The 3 months correlation between Jeju and N2Tech is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and N2Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N2Tech 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 N2Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N2Tech has no effect on the direction of Jeju Beer i.e., Jeju Beer and N2Tech go up and down completely randomly.
Pair Corralation between Jeju Beer and N2Tech
Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the N2Tech. In addition to that, Jeju Beer is 1.78 times more volatile than N2Tech Co. It trades about -0.19 of its total potential returns per unit of risk. N2Tech Co is currently generating about -0.04 per unit of volatility. If you would invest 45,000 in N2Tech Co on October 30, 2024 and sell it today you would lose (1,600) from holding N2Tech Co or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Beer Co vs. N2Tech Co
Performance |
| Timeline |
| Jeju Beer |
| N2Tech |
Jeju Beer and N2Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Beer and N2Tech
The main advantage of trading using opposite Jeju Beer and N2Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Beer position performs unexpectedly, N2Tech 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 N2Tech will offset losses from the drop in N2Tech's long position.| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
| N2Tech vs. Dongnam Chemical Co | N2Tech vs. Daewon Media Co | N2Tech vs. Kukdong Oil Chemicals | N2Tech vs. Miwon Chemical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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