Correlation Between Samhyun Steel and Jeju Air

Can any of the company-specific risk be diversified away by investing in both Samhyun Steel 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 Samhyun Steel and Jeju Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samhyun Steel Co and Jeju Air Co, you can compare the effects of market volatilities on Samhyun Steel 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 Samhyun Steel with a short position of Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhyun Steel and Jeju Air.

Diversification Opportunities for Samhyun Steel and Jeju Air

-0.22

Correlation Coefficient

Samhyun Steel  Jeju Air

Very good diversification

The 3 months correlation between Samhyun and Jeju is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Samhyun Steel Co and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air and Samhyun Steel 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 Samhyun Steel Co 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 Samhyun Steel i.e., Samhyun Steel and Jeju Air go up and down completely randomly.

Pair Corralation between Samhyun Steel and Jeju Air

Assuming the 90 days trading horizon Samhyun Steel Co is expected to generate 0.58 times more return on investment than Jeju Air. However, Samhyun Steel Co is 1.73 times less risky than Jeju Air. It trades about 0.07 of its potential returns per unit of risk. Jeju Air Co is currently generating about -0.12 per unit of risk. If you would invest  463,000  in Samhyun Steel Co on September 21, 2024 and sell it today you would earn a total of  10,000  from holding Samhyun Steel Co or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samhyun Steel Co  vs.  Jeju Air Co

Samhyun Steel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samhyun Steel Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samhyun Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jeju Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeju Air Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jeju Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samhyun Steel and Jeju Air

The main advantage of trading using opposite Samhyun Steel and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhyun Steel 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.

The idea behind Samhyun Steel Co and Jeju Air Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.