Correlation Between Korean Air and Samjin LND
Can any of the company-specific risk be diversified away by investing in both Korean Air and Samjin LND 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 Samjin LND 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 Samjin LND Co, you can compare the effects of market volatilities on Korean Air and Samjin LND 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 Samjin LND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Samjin LND.
Diversification Opportunities for Korean Air and Samjin LND
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and Samjin is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Samjin LND Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samjin LND 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 Samjin LND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samjin LND has no effect on the direction of Korean Air i.e., Korean Air and Samjin LND go up and down completely randomly.
Pair Corralation between Korean Air and Samjin LND
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.47 times more return on investment than Samjin LND. However, Korean Air Lines is 2.13 times less risky than Samjin LND. It trades about 0.11 of its potential returns per unit of risk. Samjin LND Co is currently generating about -0.17 per unit of risk. If you would invest 2,320,000 in Korean Air Lines on September 13, 2024 and sell it today you would earn a total of 105,000 from holding Korean Air Lines or generate 4.53% 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. Samjin LND Co
Performance |
| Timeline |
| Korean Air Lines |
| Samjin LND |
Korean Air and Samjin LND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Samjin LND
The main advantage of trading using opposite Korean Air and Samjin LND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Samjin LND 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 Samjin LND will offset losses from the drop in Samjin LND'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 |
| Samjin LND vs. Korean Air Lines | Samjin LND vs. Dongbu Insurance Co | Samjin LND vs. Incar Financial Service | Samjin LND vs. Lotte Non Life Insurance |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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