Correlation Between Korean Air and SKONEC Entertainment
Can any of the company-specific risk be diversified away by investing in both Korean Air and SKONEC Entertainment 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 SKONEC Entertainment 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 SKONEC Entertainment Co, you can compare the effects of market volatilities on Korean Air and SKONEC Entertainment 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 SKONEC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and SKONEC Entertainment.
Diversification Opportunities for Korean Air and SKONEC Entertainment
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and SKONEC is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and SKONEC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKONEC Entertainment 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 SKONEC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKONEC Entertainment has no effect on the direction of Korean Air i.e., Korean Air and SKONEC Entertainment go up and down completely randomly.
Pair Corralation between Korean Air and SKONEC Entertainment
Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the SKONEC Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Korean Air Lines is 2.2 times less risky than SKONEC Entertainment. The stock trades about -0.21 of its potential returns per unit of risk. The SKONEC Entertainment Co is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 308,500 in SKONEC Entertainment Co on October 16, 2024 and sell it today you would earn a total of 92,000 from holding SKONEC Entertainment Co or generate 29.82% 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. SKONEC Entertainment Co
Performance |
| Timeline |
| Korean Air Lines |
| SKONEC Entertainment |
Korean Air and SKONEC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Air and SKONEC Entertainment
The main advantage of trading using opposite Korean Air and SKONEC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, SKONEC Entertainment 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 SKONEC Entertainment will offset losses from the drop in SKONEC Entertainment's long position.| Korean Air vs. National Plastic Co | Korean Air vs. PI Advanced Materials | Korean Air vs. LS Materials | Korean Air vs. Kolon Plastics |
| SKONEC Entertainment vs. Korean Air Lines | SKONEC Entertainment vs. Haitai Confectionery Foods | SKONEC Entertainment vs. Sempio Foods Co | SKONEC Entertainment vs. BGF Retail 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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