Correlation Between Korean Air and UJU Electronics
Can any of the company-specific risk be diversified away by investing in both Korean Air and UJU Electronics 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 UJU Electronics 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 UJU Electronics Co, you can compare the effects of market volatilities on Korean Air and UJU Electronics 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 UJU Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and UJU Electronics.
Diversification Opportunities for Korean Air and UJU Electronics
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and UJU is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and UJU Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UJU Electronics 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 UJU Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UJU Electronics has no effect on the direction of Korean Air i.e., Korean Air and UJU Electronics go up and down completely randomly.
Pair Corralation between Korean Air and UJU Electronics
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the UJU Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Korean Air Lines is 1.98 times less risky than UJU Electronics. The stock trades about 0.0 of its potential returns per unit of risk. The UJU Electronics Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,209,070 in UJU Electronics Co on January 17, 2025 and sell it today you would earn a total of 1,670,930 from holding UJU Electronics Co or generate 138.2% 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. UJU Electronics Co
Performance |
| Timeline |
| Korean Air Lines |
| UJU Electronics |
Korean Air and UJU Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and UJU Electronics
The main advantage of trading using opposite Korean Air and UJU Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, UJU Electronics 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 UJU Electronics will offset losses from the drop in UJU Electronics' long position.| Korean Air vs. Samsung Electronics Co | Korean Air vs. Samsung Electronics Co | Korean Air vs. SK Hynix | Korean Air vs. HMM Co |
| UJU Electronics vs. Samsung Electronics Co | UJU Electronics vs. Samsung Electronics Co | UJU Electronics vs. Hyundai Motor Co | UJU Electronics vs. Hyundai Motor Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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