Correlation Between Korean Air and Zinus
Can any of the company-specific risk be diversified away by investing in both Korean Air and Zinus 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 Zinus 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 Zinus Inc, you can compare the effects of market volatilities on Korean Air and Zinus 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 Zinus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Zinus.
Diversification Opportunities for Korean Air and Zinus
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korean and Zinus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Zinus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinus Inc 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 Zinus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinus Inc has no effect on the direction of Korean Air i.e., Korean Air and Zinus go up and down completely randomly.
Pair Corralation between Korean Air and Zinus
Assuming the 90 days trading horizon Korean Air is expected to generate 6.4 times less return on investment than Zinus. But when comparing it to its historical volatility, Korean Air Lines is 2.52 times less risky than Zinus. It trades about 0.05 of its potential returns per unit of risk. Zinus Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,159,091 in Zinus Inc on September 24, 2024 and sell it today you would earn a total of 1,185,909 from holding Zinus Inc or generate 102.31% 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. Zinus Inc
Performance |
| Timeline |
| Korean Air Lines |
| Zinus Inc |
Korean Air and Zinus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Zinus
The main advantage of trading using opposite Korean Air and Zinus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Zinus 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 Zinus will offset losses from the drop in Zinus' long position.| Korean Air vs. LG Display Co | Korean Air vs. Woori Technology Investment | Korean Air vs. KTB Investment Securities | Korean Air vs. Korea Computer |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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