Correlation Between Jeju Beer and CU Tech

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

Diversification Opportunities for Jeju Beer and CU Tech

-0.4

Correlation Coefficient

Jeju Beer  CU Tech

Very good diversification

The 3 months correlation between Jeju and 376290 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and CU Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CU Tech Corp 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 CU Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CU Tech Corp has no effect on the direction of Jeju Beer i.e., Jeju Beer and CU Tech go up and down completely randomly.

Pair Corralation between Jeju Beer and CU Tech

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the CU Tech. In addition to that, Jeju Beer is 2.58 times more volatile than CU Tech Corp. It trades about -0.16 of its total potential returns per unit of risk. CU Tech Corp is currently generating about 0.13 per unit of volatility. If you would invest  292,500  in CU Tech Corp on December 23, 2024 and sell it today you would earn a total of  27,500  from holding CU Tech Corp or generate 9.4% 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.  CU Tech Corp

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.

CU Tech Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CU Tech Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CU Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jeju Beer and CU Tech

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

The idea behind Jeju Beer Co and CU Tech Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.