Correlation Between Korean Air and GemVaxKAEL CoLtd
Can any of the company-specific risk be diversified away by investing in both Korean Air and GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd, you can compare the effects of market volatilities on Korean Air and GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and GemVaxKAEL CoLtd.
Diversification Opportunities for Korean Air and GemVaxKAEL CoLtd
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and GemVaxKAEL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of Korean Air i.e., Korean Air and GemVaxKAEL CoLtd go up and down completely randomly.
Pair Corralation between Korean Air and GemVaxKAEL CoLtd
Assuming the 90 days trading horizon Korean Air is expected to generate 12.2 times less return on investment than GemVaxKAEL CoLtd. But when comparing it to its historical volatility, Korean Air Lines is 2.5 times less risky than GemVaxKAEL CoLtd. It trades about 0.01 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,430,000 in GemVaxKAEL CoLtd on October 12, 2024 and sell it today you would earn a total of 244,000 from holding GemVaxKAEL CoLtd or generate 17.06% 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. GemVaxKAEL CoLtd
Performance |
| Timeline |
| Korean Air Lines |
| GemVaxKAEL CoLtd |
Korean Air and GemVaxKAEL CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and GemVaxKAEL CoLtd
The main advantage of trading using opposite Korean Air and GemVaxKAEL CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd will offset losses from the drop in GemVaxKAEL CoLtd's long position.| Korean Air vs. Dongwoo Farm To | Korean Air vs. KEPCO Engineering Construction | Korean Air vs. GS Engineering Construction | Korean Air vs. Nam Hwa Construction |
| GemVaxKAEL CoLtd vs. Samlip General Foods | GemVaxKAEL CoLtd vs. Korean Drug Co | GemVaxKAEL CoLtd vs. Daechang Steel Co | GemVaxKAEL CoLtd vs. Hyundai Home Shopping |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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