Correlation Between Korean Air and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Korean Air and Nasmedia 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 Nasmedia 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 Nasmedia Co, you can compare the effects of market volatilities on Korean Air and Nasmedia 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 Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Nasmedia.
Diversification Opportunities for Korean Air and Nasmedia
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and Nasmedia is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia 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 Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Korean Air i.e., Korean Air and Nasmedia go up and down completely randomly.
Pair Corralation between Korean Air and Nasmedia
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the Nasmedia. In addition to that, Korean Air is 1.04 times more volatile than Nasmedia Co. It trades about -0.18 of its total potential returns per unit of risk. Nasmedia Co is currently generating about 0.03 per unit of volatility. If you would invest 1,395,680 in Nasmedia Co on October 14, 2024 and sell it today you would earn a total of 11,320 from holding Nasmedia Co or generate 0.81% 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. Nasmedia Co
Performance |
| Timeline |
| Korean Air Lines |
| Nasmedia |
Korean Air and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Nasmedia
The main advantage of trading using opposite Korean Air and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Korean Air vs. Seoam Machinery Industry | Korean Air vs. Camus Engineering Construction | Korean Air vs. Nice Information Telecommunication | Korean Air vs. Kisan Telecom Co |
| Nasmedia vs. Samwha Electronics Co | Nasmedia vs. Samji Electronics Co | Nasmedia vs. Korean Air Lines | Nasmedia vs. SungMoon Electronics 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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