Correlation Between Jeju Beer and V One

Can any of the company-specific risk be diversified away by investing in both Jeju Beer and V One 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 V One 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 V One Tech Co, you can compare the effects of market volatilities on Jeju Beer and V One 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 V One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Beer and V One.

Diversification Opportunities for Jeju Beer and V One

-0.44

Correlation Coefficient

Jeju Beer  V One

Very good diversification

The 3 months correlation between Jeju and 251630 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and V One Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V One Tech 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 V One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V One Tech has no effect on the direction of Jeju Beer i.e., Jeju Beer and V One go up and down completely randomly.

Pair Corralation between Jeju Beer and V One

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the V One. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Beer Co is 1.34 times less risky than V One. The stock trades about -0.42 of its potential returns per unit of risk. The V One Tech Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  376,500  in V One Tech Co on October 26, 2024 and sell it today you would earn a total of  78,500  from holding V One Tech Co or generate 20.85% return on investment over 90 days.

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

Jeju Beer Co  vs.  V One Tech Co

Jeju Beer

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

V One Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in V One Tech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, V One sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeju Beer and V One

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

The idea behind Jeju Beer Co and V One Tech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.