Correlation Between Sam Yang and Korean Air
Can any of the company-specific risk be diversified away by investing in both Sam Yang and Korean Air 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 Sam Yang and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Yang Foods and Korean Air Lines, you can compare the effects of market volatilities on Sam Yang and Korean Air 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 Sam Yang with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and Korean Air.
Diversification Opportunities for Sam Yang and Korean Air
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sam and Korean is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and Korean Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Air Lines and Sam Yang 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 Sam Yang Foods are associated (or correlated) with Korean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Air Lines has no effect on the direction of Sam Yang i.e., Sam Yang and Korean Air go up and down completely randomly.
Pair Corralation between Sam Yang and Korean Air
Assuming the 90 days trading horizon Sam Yang is expected to generate 9.61 times less return on investment than Korean Air. In addition to that, Sam Yang is 2.21 times more volatile than Korean Air Lines. It trades about 0.01 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.19 per unit of volatility. If you would invest 2,370,000 in Korean Air Lines on August 29, 2024 and sell it today you would earn a total of 155,000 from holding Korean Air Lines or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Yang Foods vs. Korean Air Lines
Performance |
| Timeline |
| Sam Yang Foods |
| Korean Air Lines |
Sam Yang and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Yang and Korean Air
The main advantage of trading using opposite Sam Yang and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang position performs unexpectedly, Korean Air 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 Korean Air will offset losses from the drop in Korean Air's long position.| Sam Yang vs. AptaBio Therapeutics | Sam Yang vs. Daewoo SBI SPAC | Sam Yang vs. Dream Security co | Sam Yang vs. Microfriend |
| Korean Air vs. Samsung Electronics Co | Korean Air vs. Samsung Electronics Co | Korean Air vs. Hyundai Motor Co | Korean Air vs. Hyundai Motor |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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