Correlation Between Jeju Beer and Eagon Industrial

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

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

Diversification Opportunities for Jeju Beer and Eagon Industrial

0.11

Correlation Coefficient

Jeju Beer  Eagon Industrial

Average diversification

The 3 months correlation between Jeju and Eagon is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon Industrial and Jeju Beer 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 Beer Co are associated (or correlated) with Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of Jeju Beer i.e., Jeju Beer and Eagon Industrial go up and down completely randomly.

Pair Corralation between Jeju Beer and Eagon Industrial

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the Eagon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Beer Co is 1.51 times less risky than Eagon Industrial. The stock trades about -0.15 of its potential returns per unit of risk. The Eagon Industrial Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  508,038  in Eagon Industrial Co on December 24, 2024 and sell it today you would lose (13,038) from holding Eagon Industrial Co or give up 2.57% of portfolio value over 90 days.

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

Jeju Beer Co  vs.  Eagon Industrial Co

Jeju Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeju Beer 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Eagon Industrial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Jeju Beer and Eagon Industrial

The main advantage of trading using opposite Jeju Beer and Eagon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Beer position performs unexpectedly, Eagon Industrial 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 Eagon Industrial will offset losses from the drop in Eagon Industrial's long position.

The idea behind Jeju Beer Co and Eagon Industrial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.