Correlation Between Korea Air and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Korea Air and Korea Computer 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 Computer 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 Computer, you can compare the effects of market volatilities on Korea Air and Korea Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Korea Computer.
Diversification Opportunities for Korea Air and Korea Computer
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Korea and Korea is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Korea Air i.e., Korea Air and Korea Computer go up and down completely randomly.
Pair Corralation between Korea Air and Korea Computer
Assuming the 90 days trading horizon Korea Air Svc is expected to generate 0.84 times more return on investment than Korea Computer. However, Korea Air Svc is 1.19 times less risky than Korea Computer. It trades about 0.03 of its potential returns per unit of risk. Korea Computer is currently generating about 0.03 per unit of risk. If you would invest 3,965,094 in Korea Air Svc on December 1, 2024 and sell it today you would earn a total of 1,124,906 from holding Korea Air Svc or generate 28.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Korea Computer
Performance |
| Timeline |
| Korea Air Svc |
| Korea Computer |
Korea Air and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Korea Computer
The main advantage of trading using opposite Korea Air and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| Korea Air vs. Vissem Electronics Co | Korea Air vs. Nam Hwa Construction | Korea Air vs. Tuksu Engineering ConstructionLtd | Korea Air vs. Keyang Electric Machinery |
| Korea Computer vs. Sempio Foods Co | Korea Computer vs. Handok Clean Tech | Korea Computer vs. MediaZen | Korea Computer vs. MEDIANA CoLtd |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |