Correlation Between Solution Advanced and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Jeju Air 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 Solution Advanced and Jeju Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Jeju Air Co, you can compare the effects of market volatilities on Solution Advanced and Jeju Air 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 Solution Advanced with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Jeju Air.
Diversification Opportunities for Solution Advanced and Jeju Air
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solution and Jeju is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Jeju Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Air has no effect on the direction of Solution Advanced i.e., Solution Advanced and Jeju Air go up and down completely randomly.
Pair Corralation between Solution Advanced and Jeju Air
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Jeju Air. In addition to that, Solution Advanced is 1.56 times more volatile than Jeju Air Co. It trades about -0.06 of its total potential returns per unit of risk. Jeju Air Co is currently generating about -0.05 per unit of volatility. If you would invest 1,292,000 in Jeju Air Co on September 12, 2024 and sell it today you would lose (418,000) from holding Jeju Air Co or give up 32.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Jeju Air Co
Performance |
| Timeline |
| Solution Advanced |
| Jeju Air |
Solution Advanced and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Jeju Air
The main advantage of trading using opposite Solution Advanced and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Jeju Air 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 Jeju Air will offset losses from the drop in Jeju Air's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Jeju Air vs. Korea New Network | Jeju Air vs. Solution Advanced Technology | Jeju Air vs. Busan Industrial Co | Jeju Air vs. Busan Ind |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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