Correlation Between Korea Air and Dongsin Engineering
Can any of the company-specific risk be diversified away by investing in both Korea Air and Dongsin Engineering 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 Dongsin Engineering 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 Dongsin Engineering Construction, you can compare the effects of market volatilities on Korea Air and Dongsin Engineering 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 Dongsin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Dongsin Engineering.
Diversification Opportunities for Korea Air and Dongsin Engineering
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Dongsin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Dongsin Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsin Engineering 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 Dongsin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsin Engineering has no effect on the direction of Korea Air i.e., Korea Air and Dongsin Engineering go up and down completely randomly.
Pair Corralation between Korea Air and Dongsin Engineering
Assuming the 90 days trading horizon Korea Air is expected to generate 1.39 times less return on investment than Dongsin Engineering. But when comparing it to its historical volatility, Korea Air Svc is 2.12 times less risky than Dongsin Engineering. It trades about 0.04 of its potential returns per unit of risk. Dongsin Engineering Construction is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,489,534 in Dongsin Engineering Construction on August 27, 2024 and sell it today you would earn a total of 83,466 from holding Dongsin Engineering Construction or generate 5.6% 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. Dongsin Engineering Constructi
Performance |
| Timeline |
| Korea Air Svc |
| Dongsin Engineering |
Korea Air and Dongsin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Dongsin Engineering
The main advantage of trading using opposite Korea Air and Dongsin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Dongsin Engineering 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 Dongsin Engineering will offset losses from the drop in Dongsin Engineering's long position.| Korea Air vs. Samsung Electronics Co | Korea Air vs. Samsung Electronics Co | Korea Air vs. Hyundai Motor Co | Korea Air vs. Hyundai Motor |
| Dongsin Engineering vs. Busan Industrial Co | Dongsin Engineering vs. Busan Ind | Dongsin Engineering vs. Mirae Asset Daewoo | Dongsin Engineering vs. UNISEM 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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