Correlation Between Korea Air and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both Korea Air and Keyang Electric 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 Keyang Electric 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 Keyang Electric Machinery, you can compare the effects of market volatilities on Korea Air and Keyang Electric 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 Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Keyang Electric.
Diversification Opportunities for Korea Air and Keyang Electric
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Keyang is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery 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 Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of Korea Air i.e., Korea Air and Keyang Electric go up and down completely randomly.
Pair Corralation between Korea Air and Keyang Electric
Assuming the 90 days trading horizon Korea Air Svc is expected to under-perform the Keyang Electric. But the stock apears to be less risky and, when comparing its historical volatility, Korea Air Svc is 1.34 times less risky than Keyang Electric. The stock trades about -0.13 of its potential returns per unit of risk. The Keyang Electric Machinery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 359,500 in Keyang Electric Machinery on October 28, 2024 and sell it today you would earn a total of 20,000 from holding Keyang Electric Machinery or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Keyang Electric Machinery
Performance |
| Timeline |
| Korea Air Svc |
| Keyang Electric Machinery |
Korea Air and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Keyang Electric
The main advantage of trading using opposite Korea Air and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| Korea Air vs. Samsung Electronics Co | Korea Air vs. Samsung Electronics Co | Korea Air vs. KB Financial Group | Korea Air vs. Shinhan Financial Group |
| Keyang Electric vs. Stic Investments | Keyang Electric vs. Daol Investment Securities | Keyang Electric vs. TS Investment Corp | Keyang Electric vs. Nh Investment And |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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