Correlation Between Humasis and Jeju Air

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

Diversification Opportunities for Humasis and Jeju Air

HumasisJejuDiversified AwayHumasisJejuDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Humasis and Jeju is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Humasis 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 Humasis 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 Humasis 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 Humasis i.e., Humasis and Jeju Air go up and down completely randomly.

Pair Corralation between Humasis and Jeju Air

Assuming the 90 days trading horizon Humasis Co is expected to under-perform the Jeju Air. In addition to that, Humasis is 1.66 times more volatile than Jeju Air Co. It trades about -0.11 of its total potential returns per unit of risk. Jeju Air Co is currently generating about -0.16 per unit of volatility. If you would invest  930,000  in Jeju Air Co on September 25, 2024 and sell it today you would lose (84,000) from holding Jeju Air Co or give up 9.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Humasis Co  vs.  Jeju Air Co

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-50510152025
JavaScript chart by amCharts 3.21.15205470 089590
       Timeline  
Humasis 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Humasis Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humasis sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1,5001,6001,7001,8001,9002,0002,1002,200
Jeju Air 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8,5009,0009,50010,00010,500

Humasis and Jeju Air Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-19.17-14.35-9.54-4.73-0.084.649.5314.4219.3124.19 0.020.040.060.08
JavaScript chart by amCharts 3.21.15205470 089590
       Returns  

Pair Trading with Humasis and Jeju Air

The main advantage of trading using opposite Humasis and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humasis 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 Humasis 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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