Correlation Between Korean Air and MITECH CoLtd
Can any of the company-specific risk be diversified away by investing in both Korean Air and MITECH 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 MITECH 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 MITECH CoLtd, you can compare the effects of market volatilities on Korean Air and MITECH 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 MITECH CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and MITECH CoLtd.
Diversification Opportunities for Korean Air and MITECH CoLtd
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korean and MITECH is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH 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 MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of Korean Air i.e., Korean Air and MITECH CoLtd go up and down completely randomly.
Pair Corralation between Korean Air and MITECH CoLtd
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the MITECH CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Korean Air Lines is 1.05 times less risky than MITECH CoLtd. The stock trades about -0.05 of its potential returns per unit of risk. The MITECH CoLtd is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 759,000 in MITECH CoLtd on September 24, 2024 and sell it today you would earn a total of 56,000 from holding MITECH CoLtd or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Air Lines vs. MITECH CoLtd
Performance |
| Timeline |
| Korean Air Lines |
| MITECH CoLtd |
Korean Air and MITECH CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and MITECH CoLtd
The main advantage of trading using opposite Korean Air and MITECH CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, MITECH 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 MITECH CoLtd will offset losses from the drop in MITECH CoLtd's long position.| Korean Air vs. LG Display Co | Korean Air vs. Woori Technology Investment | Korean Air vs. KTB Investment Securities | Korean Air vs. Korea Computer |
| MITECH CoLtd vs. Samsung Electronics Co | MITECH CoLtd vs. Samsung Electronics Co | MITECH CoLtd vs. LG Energy Solution | MITECH CoLtd vs. SK Hynix |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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