Correlation Between Korean Air and PJ Electronics
Can any of the company-specific risk be diversified away by investing in both Korean Air and PJ Electronics 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 PJ Electronics 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 PJ Electronics Co, you can compare the effects of market volatilities on Korean Air and PJ Electronics 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 PJ Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and PJ Electronics.
Diversification Opportunities for Korean Air and PJ Electronics
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and 006140 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and PJ Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Electronics 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 PJ Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Electronics has no effect on the direction of Korean Air i.e., Korean Air and PJ Electronics go up and down completely randomly.
Pair Corralation between Korean Air and PJ Electronics
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.56 times more return on investment than PJ Electronics. However, Korean Air Lines is 1.78 times less risky than PJ Electronics. It trades about 0.03 of its potential returns per unit of risk. PJ Electronics Co is currently generating about -0.04 per unit of risk. If you would invest 2,286,250 in Korean Air Lines on September 3, 2024 and sell it today you would earn a total of 308,750 from holding Korean Air Lines or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. PJ Electronics Co
Performance |
| Timeline |
| Korean Air Lines |
| PJ Electronics |
Korean Air and PJ Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and PJ Electronics
The main advantage of trading using opposite Korean Air and PJ Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, PJ Electronics 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 PJ Electronics will offset losses from the drop in PJ Electronics' long position.| Korean Air vs. INFINITT Healthcare Co | Korean Air vs. Daiyang Metal Co | Korean Air vs. Youngsin Metal Industrial | Korean Air vs. Osang Healthcare Co,Ltd |
| PJ Electronics vs. Daejoo Electronic Materials | PJ Electronics vs. Parksystems Corp | PJ Electronics vs. BH Co | PJ Electronics vs. Partron Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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