Correlation Between TOPMATERIAL and Jeju Air
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL 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 TOPMATERIAL and Jeju Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Jeju Air Co, you can compare the effects of market volatilities on TOPMATERIAL 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 TOPMATERIAL with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Jeju Air.
Diversification Opportunities for TOPMATERIAL and Jeju Air
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between TOPMATERIAL and Jeju is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air and TOPMATERIAL 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 TOPMATERIAL LTD 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 TOPMATERIAL i.e., TOPMATERIAL and Jeju Air go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Jeju Air
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Jeju Air. In addition to that, TOPMATERIAL is 1.53 times more volatile than Jeju Air Co. It trades about -0.25 of its total potential returns per unit of risk. Jeju Air Co is currently generating about 0.07 per unit of volatility. If you would invest 952,000 in Jeju Air Co on September 1, 2024 and sell it today you would earn a total of 26,000 from holding Jeju Air Co or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Jeju Air Co
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Jeju Air |
TOPMATERIAL and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Jeju Air
The main advantage of trading using opposite TOPMATERIAL and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL 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.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| Jeju Air vs. Korea New Network | Jeju Air vs. ICD Co | Jeju Air vs. DYPNF CoLtd | Jeju Air vs. Busan Industrial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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