Correlation Between Moadata and Jeju Beer

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

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

Diversification Opportunities for Moadata and Jeju Beer

0.21

Correlation Coefficient

Moadata  Jeju Beer

Modest diversification

The 3 months correlation between Moadata and Jeju is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Moadata Co and Jeju Beer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Beer and Moadata 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 Moadata Co are associated (or correlated) with Jeju Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Beer has no effect on the direction of Moadata i.e., Moadata and Jeju Beer go up and down completely randomly.

Pair Corralation between Moadata and Jeju Beer

Assuming the 90 days trading horizon Moadata Co is expected to under-perform the Jeju Beer. But the stock apears to be less risky and, when comparing its historical volatility, Moadata Co is 1.18 times less risky than Jeju Beer. The stock trades about -0.05 of its potential returns per unit of risk. The Jeju Beer Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  248,500  in Jeju Beer Co on October 22, 2024 and sell it today you would earn a total of  6,500  from holding Jeju Beer Co or generate 2.62% return on investment over 90 days.

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

Moadata Co  vs.  Jeju Beer Co

Moadata

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moadata Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jeju Beer

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jeju Beer Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jeju Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Moadata and Jeju Beer

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

The idea behind Moadata Co and Jeju Beer 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.