Correlation Between Korea Air and Korea Refractories
Can any of the company-specific risk be diversified away by investing in both Korea Air and Korea Refractories 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 Korea Refractories 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 Korea Refractories Co, you can compare the effects of market volatilities on Korea Air and Korea Refractories 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 Korea Refractories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Korea Refractories.
Diversification Opportunities for Korea Air and Korea Refractories
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Korea is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Korea Refractories Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refractories 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 Korea Refractories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refractories has no effect on the direction of Korea Air i.e., Korea Air and Korea Refractories go up and down completely randomly.
Pair Corralation between Korea Air and Korea Refractories
Assuming the 90 days trading horizon Korea Air Svc is expected to generate 0.85 times more return on investment than Korea Refractories. However, Korea Air Svc is 1.17 times less risky than Korea Refractories. It trades about 0.05 of its potential returns per unit of risk. Korea Refractories Co is currently generating about -0.01 per unit of risk. If you would invest 3,803,553 in Korea Air Svc on September 13, 2024 and sell it today you would earn a total of 1,806,447 from holding Korea Air Svc or generate 47.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Korea Refractories Co
Performance |
| Timeline |
| Korea Air Svc |
| Korea Refractories |
Korea Air and Korea Refractories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Korea Refractories
The main advantage of trading using opposite Korea Air and Korea Refractories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Korea Refractories 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 Korea Refractories will offset losses from the drop in Korea Refractories' long position.| Korea Air vs. Korea New Network | Korea Air vs. Solution Advanced Technology | Korea Air vs. Busan Industrial Co | Korea Air vs. Busan Ind |
| Korea Refractories vs. Hanil Iron Steel | Korea Refractories vs. Dong A Steel Technology | Korea Refractories vs. Korea Air Svc | Korea Refractories vs. Dongbang Transport Logistics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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