Correlation Between Korean Air and Daishin Information
Can any of the company-specific risk be diversified away by investing in both Korean Air and Daishin Information 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 Daishin Information 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 Daishin Information Communications, you can compare the effects of market volatilities on Korean Air and Daishin Information 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 Daishin Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Daishin Information.
Diversification Opportunities for Korean Air and Daishin Information
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and Daishin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Daishin Information Communicat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Information 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 Daishin Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Information has no effect on the direction of Korean Air i.e., Korean Air and Daishin Information go up and down completely randomly.
Pair Corralation between Korean Air and Daishin Information
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the Daishin Information. But the stock apears to be less risky and, when comparing its historical volatility, Korean Air Lines is 3.54 times less risky than Daishin Information. The stock trades about -0.12 of its potential returns per unit of risk. The Daishin Information Communications is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 85,900 in Daishin Information Communications on September 27, 2024 and sell it today you would earn a total of 20,400 from holding Daishin Information Communications or generate 23.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. Daishin Information Communicat
Performance |
| Timeline |
| Korean Air Lines |
| Daishin Information |
Korean Air and Daishin Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Daishin Information
The main advantage of trading using opposite Korean Air and Daishin Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Daishin Information 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 Daishin Information will offset losses from the drop in Daishin Information's long position.| Korean Air vs. Busan Industrial Co | Korean Air vs. Busan Ind | Korean Air vs. Mirae Asset Daewoo | Korean Air vs. Shinhan WTI Futures |
| Daishin Information vs. Lotte Chilsung Beverage | Daishin Information vs. Cuckoo Electronics Co | Daishin Information vs. Tway Air Co | Daishin Information vs. Korean Air Lines |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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