Correlation Between Korean Air and Humax Holdings
Can any of the company-specific risk be diversified away by investing in both Korean Air and Humax Holdings 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 Humax Holdings 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 Humax Holdings Co, you can compare the effects of market volatilities on Korean Air and Humax Holdings 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 Humax Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Humax Holdings.
Diversification Opportunities for Korean Air and Humax Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and Humax is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Humax Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax Holdings 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 Humax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax Holdings has no effect on the direction of Korean Air i.e., Korean Air and Humax Holdings go up and down completely randomly.
Pair Corralation between Korean Air and Humax Holdings
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.45 times more return on investment than Humax Holdings. However, Korean Air Lines is 2.24 times less risky than Humax Holdings. It trades about 0.11 of its potential returns per unit of risk. Humax Holdings Co is currently generating about -0.45 per unit of risk. If you would invest 2,320,000 in Korean Air Lines on September 13, 2024 and sell it today you would earn a total of 100,000 from holding Korean Air Lines or generate 4.31% 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. Humax Holdings Co
Performance |
| Timeline |
| Korean Air Lines |
| Humax Holdings |
Korean Air and Humax Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Humax Holdings
The main advantage of trading using opposite Korean Air and Humax Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Humax Holdings 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 Humax Holdings will offset losses from the drop in Humax Holdings' long position.| Korean Air vs. Korea New Network | Korean Air vs. Solution Advanced Technology | Korean Air vs. Busan Industrial Co | Korean Air vs. Busan Ind |
| Humax Holdings vs. Korean Air Lines | Humax Holdings vs. Samsung Publishing Co | Humax Holdings vs. Cloud Air CoLtd | Humax Holdings vs. Haitai Confectionery Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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