Correlation Between Korean Air and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both Korean Air and Jeong Moon 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 Jeong Moon 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 Jeong Moon Information, you can compare the effects of market volatilities on Korean Air and Jeong Moon 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 Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Jeong Moon.
Diversification Opportunities for Korean Air and Jeong Moon
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and Jeong is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon 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 Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of Korean Air i.e., Korean Air and Jeong Moon go up and down completely randomly.
Pair Corralation between Korean Air and Jeong Moon
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.73 times more return on investment than Jeong Moon. However, Korean Air Lines is 1.37 times less risky than Jeong Moon. It trades about 0.02 of its potential returns per unit of risk. Jeong Moon Information is currently generating about -0.03 per unit of risk. If you would invest 2,290,493 in Korean Air Lines on September 13, 2024 and sell it today you would earn a total of 129,507 from holding Korean Air Lines or generate 5.65% 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. Jeong Moon Information
Performance |
| Timeline |
| Korean Air Lines |
| Jeong Moon Information |
Korean Air and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Jeong Moon
The main advantage of trading using opposite Korean Air and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's 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 |
| Jeong Moon vs. Cube Entertainment | Jeong Moon vs. Dreamus Company | Jeong Moon vs. LG Energy Solution | Jeong Moon vs. Dongwon System |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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