Correlation Between Korean Air and E Investment

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Can any of the company-specific risk be diversified away by investing in both Korean Air and E Investment 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 E Investment 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 E Investment Development, you can compare the effects of market volatilities on Korean Air and E Investment 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 E Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and E Investment.

Diversification Opportunities for Korean Air and E Investment

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Korean and 093230 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and E Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Investment Development 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 E Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Investment Development has no effect on the direction of Korean Air i.e., Korean Air and E Investment go up and down completely randomly.

Pair Corralation between Korean Air and E Investment

If you would invest  2,370,000  in Korean Air Lines on August 29, 2024 and sell it today you would earn a total of  155,000  from holding Korean Air Lines or generate 6.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Korean Air Lines  vs.  E Investment Development

 Performance 
       Timeline  
Korean Air Lines 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Korean Air Lines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korean Air sustained solid returns over the last few months and may actually be approaching a breakup point.
E Investment Development 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days E Investment Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, E Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korean Air and E Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Korean Air and E Investment

The main advantage of trading using opposite Korean Air and E Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, E Investment 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 E Investment will offset losses from the drop in E Investment's long position.
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The idea behind Korean Air Lines and E Investment Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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