Correlation Between Korean Air and Clean Science
Can any of the company-specific risk be diversified away by investing in both Korean Air and Clean Science 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 Clean Science 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 Clean Science co, you can compare the effects of market volatilities on Korean Air and Clean Science 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 Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Clean Science.
Diversification Opportunities for Korean Air and Clean Science
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and Clean is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co 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 Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of Korean Air i.e., Korean Air and Clean Science go up and down completely randomly.
Pair Corralation between Korean Air and Clean Science
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 1.38 times more return on investment than Clean Science. However, Korean Air is 1.38 times more volatile than Clean Science co. It trades about 0.21 of its potential returns per unit of risk. Clean Science co is currently generating about -0.47 per unit of risk. If you would invest 2,435,000 in Korean Air Lines on September 3, 2024 and sell it today you would earn a total of 160,000 from holding Korean Air Lines or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. Clean Science co
Performance |
| Timeline |
| Korean Air Lines |
| Clean Science co |
Korean Air and Clean Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Clean Science
The main advantage of trading using opposite Korean Air and Clean Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Clean Science 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 Clean Science will offset losses from the drop in Clean Science's 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 |
| Clean Science vs. Daol Investment Securities | Clean Science vs. SEOJEON ELECTRIC MACHINERY | Clean Science vs. Hanwha InvestmentSecurities Co | Clean Science vs. SV Investment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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