Correlation Between Korean Air and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Korean Air and KMH Hitech 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 KMH Hitech 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 KMH Hitech Co, you can compare the effects of market volatilities on Korean Air and KMH Hitech 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 KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and KMH Hitech.
Diversification Opportunities for Korean Air and KMH Hitech
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and KMH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech 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 KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of Korean Air i.e., Korean Air and KMH Hitech go up and down completely randomly.
Pair Corralation between Korean Air and KMH Hitech
Assuming the 90 days trading horizon Korean Air is expected to generate 4.24 times less return on investment than KMH Hitech. In addition to that, Korean Air is 1.1 times more volatile than KMH Hitech Co. It trades about 0.05 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about 0.23 per unit of volatility. If you would invest 90,100 in KMH Hitech Co on October 24, 2024 and sell it today you would earn a total of 6,800 from holding KMH Hitech Co or generate 7.55% 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. KMH Hitech Co
Performance |
| Timeline |
| Korean Air Lines |
| KMH Hitech |
Korean Air and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and KMH Hitech
The main advantage of trading using opposite Korean Air and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's long position.| Korean Air vs. CU Medical Systems | Korean Air vs. Korea Steel Co | Korean Air vs. KCC Engineering Construction | Korean Air vs. Dongbang Ship Machinery |
| KMH Hitech vs. Korea Computer | KMH Hitech vs. Kakao Games Corp | KMH Hitech vs. TS Investment Corp | KMH Hitech vs. Lotte Data Communication |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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