Correlation Between Korean Air and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both Korean Air and Phoenix 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 Phoenix 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 Phoenix Materials Co, you can compare the effects of market volatilities on Korean Air and Phoenix 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 Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Phoenix Materials.
Diversification Opportunities for Korean Air and Phoenix Materials
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and Phoenix is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials 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 Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Korean Air i.e., Korean Air and Phoenix Materials go up and down completely randomly.
Pair Corralation between Korean Air and Phoenix Materials
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.33 times more return on investment than Phoenix Materials. However, Korean Air Lines is 3.05 times less risky than Phoenix Materials. It trades about 0.02 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.03 per unit of risk. If you would invest 2,247,500 in Korean Air Lines on September 12, 2024 and sell it today you would earn a total of 112,500 from holding Korean Air Lines or generate 5.01% 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. Phoenix Materials Co
Performance |
| Timeline |
| Korean Air Lines |
| Phoenix Materials |
Korean Air and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Phoenix Materials
The main advantage of trading using opposite Korean Air and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Phoenix 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' 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 |
| Phoenix Materials vs. Organic Special Pet | Phoenix Materials vs. Infinitt Healthcare Co | Phoenix Materials vs. CKH Food Health | Phoenix Materials vs. CJ Seafood Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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