Correlation Between Korean Air and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Korean Air and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on Korean Air and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Daejung Chemicals.
Diversification Opportunities for Korean Air and Daejung Chemicals
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and Daejung is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Korean Air i.e., Korean Air and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Korean Air and Daejung Chemicals
Assuming the 90 days trading horizon Korean Air Lines is expected to generate 0.71 times more return on investment than Daejung Chemicals. However, Korean Air Lines is 1.41 times less risky than Daejung Chemicals. It trades about 0.0 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.01 per unit of risk. If you would invest 2,354,063 in Korean Air Lines on October 13, 2024 and sell it today you would lose (59,063) from holding Korean Air Lines or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Korean Air Lines |
| Daejung Chemicals Metals |
Korean Air and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Daejung Chemicals
The main advantage of trading using opposite Korean Air and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Korean Air vs. DB Insurance Co | Korean Air vs. BNK Financial Group | Korean Air vs. Jeju Bank | Korean Air vs. Youl Chon Chemical |
| Daejung Chemicals vs. Next Entertainment World | Daejung Chemicals vs. Choil Aluminum | Daejung Chemicals vs. Digital Multimedia Technology | Daejung Chemicals vs. DC Media 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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