Correlation Between Jeju Beer and Organic Tea
Can any of the company-specific risk be diversified away by investing in both Jeju Beer and Organic Tea 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 Organic Tea 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 Organic Tea Cosmetics, you can compare the effects of market volatilities on Jeju Beer and Organic Tea 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 Organic Tea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Beer and Organic Tea.
Diversification Opportunities for Jeju Beer and Organic Tea
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jeju and Organic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and Organic Tea Cosmetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Tea Cosmetics 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 Organic Tea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Tea Cosmetics has no effect on the direction of Jeju Beer i.e., Jeju Beer and Organic Tea go up and down completely randomly.
Pair Corralation between Jeju Beer and Organic Tea
Assuming the 90 days trading horizon Jeju Beer is expected to generate 1.06 times less return on investment than Organic Tea. But when comparing it to its historical volatility, Jeju Beer Co is 1.37 times less risky than Organic Tea. It trades about 0.04 of its potential returns per unit of risk. Organic Tea Cosmetics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,700 in Organic Tea Cosmetics on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Organic Tea Cosmetics or generate 1.49% 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. Organic Tea Cosmetics
Performance |
| Timeline |
| Jeju Beer |
| Organic Tea Cosmetics |
Jeju Beer and Organic Tea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Beer and Organic Tea
The main advantage of trading using opposite Jeju Beer and Organic Tea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Beer position performs unexpectedly, Organic Tea 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 Organic Tea will offset losses from the drop in Organic Tea's long position.| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
| Organic Tea vs. Hwangkum Steel Technology | Organic Tea vs. Cloud Air CoLtd | Organic Tea vs. Lion Chemtech Co | Organic Tea vs. Korea Air Svc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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