Correlation Between Korean Air and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Korean Air and Hyundai Home 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 Hyundai Home 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 Hyundai Home Shopping, you can compare the effects of market volatilities on Korean Air and Hyundai Home 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 Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Hyundai Home.
Diversification Opportunities for Korean Air and Hyundai Home
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and Hyundai is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping 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 Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Korean Air i.e., Korean Air and Hyundai Home go up and down completely randomly.
Pair Corralation between Korean Air and Hyundai Home
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the Hyundai Home. In addition to that, Korean Air is 1.42 times more volatile than Hyundai Home Shopping. It trades about -0.21 of its total potential returns per unit of risk. Hyundai Home Shopping is currently generating about -0.23 per unit of volatility. If you would invest 4,610,000 in Hyundai Home Shopping on October 16, 2024 and sell it today you would lose (260,000) from holding Hyundai Home Shopping or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Korean Air Lines vs. Hyundai Home Shopping
Performance |
| Timeline |
| Korean Air Lines |
| Hyundai Home Shopping |
Korean Air and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Hyundai Home
The main advantage of trading using opposite Korean Air and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Hyundai Home 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 Hyundai Home will offset losses from the drop in Hyundai Home's long position.| Korean Air vs. National Plastic Co | Korean Air vs. PI Advanced Materials | Korean Air vs. LS Materials | Korean Air vs. Kolon Plastics |
| Hyundai Home vs. Korean Air Lines | Hyundai Home vs. DSC Investment | Hyundai Home vs. Alton Sports CoLtd | Hyundai Home vs. Cloud Air CoLtd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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