Correlation Between Korean Air and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Korean Air and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical, you can compare the effects of market volatilities on Korean Air and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Miwon Chemical.
Diversification Opportunities for Korean Air and Miwon Chemical
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and Miwon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Korean Air i.e., Korean Air and Miwon Chemical go up and down completely randomly.
Pair Corralation between Korean Air and Miwon Chemical
Assuming the 90 days trading horizon Korean Air is expected to generate 4.13 times less return on investment than Miwon Chemical. In addition to that, Korean Air is 1.45 times more volatile than Miwon Chemical. It trades about 0.01 of its total potential returns per unit of risk. Miwon Chemical is currently generating about 0.07 per unit of volatility. If you would invest 6,153,527 in Miwon Chemical on September 19, 2024 and sell it today you would earn a total of 1,956,473 from holding Miwon Chemical or generate 31.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. Miwon Chemical
Performance |
| Timeline |
| Korean Air Lines |
| Miwon Chemical |
Korean Air and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and Miwon Chemical
The main advantage of trading using opposite Korean Air and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Korean Air vs. E Investment Development | Korean Air vs. Daejung Chemicals Metals | Korean Air vs. KTB Investment Securities | Korean Air vs. SBI Investment KOREA |
| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. DukSan Neolux CoLtd | Miwon Chemical vs. LIG ES SPAC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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