Correlation Between Jeju Beer and SK Bioscience

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

Diversification Opportunities for Jeju Beer and SK Bioscience

-0.42

Correlation Coefficient

Jeju Beer  SK Bioscience

Very good diversification

The 3 months correlation between Jeju and 302440 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience 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 SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Jeju Beer i.e., Jeju Beer and SK Bioscience go up and down completely randomly.

Pair Corralation between Jeju Beer and SK Bioscience

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the SK Bioscience. In addition to that, Jeju Beer is 1.61 times more volatile than SK Bioscience Co. It trades about -0.03 of its total potential returns per unit of risk. SK Bioscience Co is currently generating about -0.02 per unit of volatility. If you would invest  7,430,000  in SK Bioscience Co on October 11, 2024 and sell it today you would lose (2,240,000) from holding SK Bioscience Co or give up 30.15% of portfolio value over 90 days.

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

Jeju Beer Co  vs.  SK Bioscience Co

Jeju Beer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jeju Beer Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jeju Beer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SK Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Bioscience Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SK Bioscience 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 SK Bioscience

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

The idea behind Jeju Beer Co and SK Bioscience 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.

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 CEOs Directory module to screen CEOs from public companies around the world.