Correlation Between Korean Air and Daeduck Electronics
Can any of the company-specific risk be diversified away by investing in both Korean Air and Daeduck 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 Daeduck 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 Daeduck Electronics Co, you can compare the effects of market volatilities on Korean Air and Daeduck 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 Daeduck Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Daeduck Electronics.
Diversification Opportunities for Korean Air and Daeduck Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korean and Daeduck is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck 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 Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of Korean Air i.e., Korean Air and Daeduck Electronics go up and down completely randomly.
Pair Corralation between Korean Air and Daeduck Electronics
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 1.88 times more return on investment than Daeduck Electronics. However, Korean Air is 1.88 times more volatile than Daeduck Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Daeduck Electronics Co is currently generating about 0.04 per unit of risk. If you would invest 2,180,000 in Korean Air Lines on September 3, 2024 and sell it today you would earn a total of 415,000 from holding Korean Air Lines or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. Daeduck Electronics Co
Performance |
| Timeline |
| Korean Air Lines |
| Daeduck Electronics |
Korean Air and Daeduck Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Daeduck Electronics
The main advantage of trading using opposite Korean Air and Daeduck Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Daeduck 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 Daeduck Electronics will offset losses from the drop in Daeduck 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 |
| Daeduck Electronics vs. Kukil Metal Co | Daeduck Electronics vs. Display Tech Co | Daeduck Electronics vs. Seoyon Topmetal Co | Daeduck Electronics vs. Formetal 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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