Correlation Between Jeju Air and Hanjoo Light

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Jeju Air and Hanjoo Light 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 Air and Hanjoo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Air Co and Hanjoo Light Metal, you can compare the effects of market volatilities on Jeju Air and Hanjoo Light 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 Air with a short position of Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Air and Hanjoo Light.

Diversification Opportunities for Jeju Air and Hanjoo Light

JejuHanjooDiversified AwayJejuHanjooDiversified Away100%
0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Jeju and Hanjoo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Air Co and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal and Jeju Air 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 Air Co are associated (or correlated) with Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Jeju Air i.e., Jeju Air and Hanjoo Light go up and down completely randomly.

Pair Corralation between Jeju Air and Hanjoo Light

Assuming the 90 days trading horizon Jeju Air Co is expected to under-perform the Hanjoo Light. In addition to that, Jeju Air is 1.09 times more volatile than Hanjoo Light Metal. It trades about -0.16 of its total potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.13 per unit of volatility. If you would invest  88,500  in Hanjoo Light Metal on November 18, 2024 and sell it today you would lose (14,000) from holding Hanjoo Light Metal or give up 15.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Jeju Air Co  vs.  Hanjoo Light Metal

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -25-20-15-10-5
JavaScript chart by amCharts 3.21.15089590 198940
       Timeline  
Jeju Air 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Jeju Air Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7,0007,5008,0008,5009,0009,500
Hanjoo Light Metal 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hanjoo Light Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb700750800850900

Jeju Air and Hanjoo Light Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.82-2.86-1.9-0.940.00.791.582.373.16 0.0550.0600.0650.0700.0750.080
JavaScript chart by amCharts 3.21.15089590 198940
       Returns  

Pair Trading with Jeju Air and Hanjoo Light

The main advantage of trading using opposite Jeju Air and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Air position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.
The idea behind Jeju Air Co and Hanjoo Light Metal 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.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume