Correlation Between Korean Air and Sung Bo
Can any of the company-specific risk be diversified away by investing in both Korean Air and Sung Bo 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 Korean Air and Sung Bo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Air Lines and Sung Bo Chemicals, you can compare the effects of market volatilities on Korean Air and Sung Bo 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 Korean Air with a short position of Sung Bo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Sung Bo.
Diversification Opportunities for Korean Air and Sung Bo
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and Sung is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Sung Bo Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Bo Chemicals and Korean Air 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 Korean Air Lines are associated (or correlated) with Sung Bo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Bo Chemicals has no effect on the direction of Korean Air i.e., Korean Air and Sung Bo go up and down completely randomly.
Pair Corralation between Korean Air and Sung Bo
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the Sung Bo. In addition to that, Korean Air is 2.26 times more volatile than Sung Bo Chemicals. It trades about -0.13 of its total potential returns per unit of risk. Sung Bo Chemicals is currently generating about -0.09 per unit of volatility. If you would invest 250,000 in Sung Bo Chemicals on December 1, 2024 and sell it today you would lose (4,000) from holding Sung Bo Chemicals or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. Sung Bo Chemicals
Performance |
| Timeline |
| Korean Air Lines |
| Sung Bo Chemicals |
Korean Air and Sung Bo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Sung Bo
The main advantage of trading using opposite Korean Air and Sung Bo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Sung Bo 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 Sung Bo will offset losses from the drop in Sung Bo's long position.| Korean Air vs. Hanwha Life Insurance | Korean Air vs. Daishin Information Communications | Korean Air vs. Ssangyong Information Communication | Korean Air vs. Aprogen Healthcare Games |
| Sung Bo vs. Iljin Display | Sung Bo vs. Hotel Shilla Co | Sung Bo vs. Nice Information Telecommunication | Sung Bo vs. Dongkuk Steel Mill |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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