Correlation Between Korean Air and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Korean Air and Ssangyong Materials 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 Ssangyong Materials 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 Ssangyong Materials Corp, you can compare the effects of market volatilities on Korean Air and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Ssangyong Materials.
Diversification Opportunities for Korean Air and Ssangyong Materials
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korean and Ssangyong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Korean Air i.e., Korean Air and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Korean Air and Ssangyong Materials
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.45 times more return on investment than Ssangyong Materials. However, Korean Air Lines is 2.24 times less risky than Ssangyong Materials. It trades about 0.24 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.03 per unit of risk. If you would invest 2,390,000 in Korean Air Lines on September 1, 2024 and sell it today you would earn a total of 205,000 from holding Korean Air Lines or generate 8.58% 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. Ssangyong Materials Corp
Performance |
| Timeline |
| Korean Air Lines |
| Ssangyong Materials Corp |
Korean Air and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Ssangyong Materials
The main advantage of trading using opposite Korean Air and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| Korean Air vs. Korea New Network | Korean Air vs. ICD Co | Korean Air vs. DYPNF CoLtd | Korean Air vs. Busan Industrial Co |
| Ssangyong Materials vs. AptaBio Therapeutics | Ssangyong Materials vs. Daewoo SBI SPAC | Ssangyong Materials vs. Dream Security co | Ssangyong Materials vs. Microfriend |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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