Correlation Between Korea Air and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Korea Air and Korean Reinsurance 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 Korea Air and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Air Svc and Korean Reinsurance Co, you can compare the effects of market volatilities on Korea Air and Korean Reinsurance 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 Korea Air with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Korean Reinsurance.
Diversification Opportunities for Korea Air and Korean Reinsurance
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Korean is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Korea 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 Korea Air Svc are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Korea Air i.e., Korea Air and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Korea Air and Korean Reinsurance
Assuming the 90 days trading horizon Korea Air is expected to generate 1.67 times less return on investment than Korean Reinsurance. In addition to that, Korea Air is 1.53 times more volatile than Korean Reinsurance Co. It trades about 0.03 of its total potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.08 per unit of volatility. If you would invest 489,667 in Korean Reinsurance Co on September 1, 2024 and sell it today you would earn a total of 321,333 from holding Korean Reinsurance Co or generate 65.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Korean Reinsurance Co
Performance |
| Timeline |
| Korea Air Svc |
| Korean Reinsurance |
Korea Air and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Korean Reinsurance
The main advantage of trading using opposite Korea Air and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Korea Air vs. Korea New Network | Korea Air vs. ICD Co | Korea Air vs. DYPNF CoLtd | Korea Air vs. Busan Industrial Co |
| Korean Reinsurance vs. SH Energy Chemical | Korean Reinsurance vs. Namhae Chemical | Korean Reinsurance vs. JC Chemical Co | Korean Reinsurance vs. Sung Bo Chemicals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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