Correlation Between Korea Air and System
Can any of the company-specific risk be diversified away by investing in both Korea Air and System 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 System 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 System and Application, you can compare the effects of market volatilities on Korea Air and System 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 System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and System.
Diversification Opportunities for Korea Air and System
Average diversification
The 3 months correlation between Korea and System is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of Korea Air i.e., Korea Air and System go up and down completely randomly.
Pair Corralation between Korea Air and System
Assuming the 90 days trading horizon Korea Air Svc is expected to generate 0.8 times more return on investment than System. However, Korea Air Svc is 1.24 times less risky than System. It trades about 0.03 of its potential returns per unit of risk. System and Application is currently generating about -0.01 per unit of risk. If you would invest 4,229,434 in Korea Air Svc on October 28, 2024 and sell it today you would earn a total of 1,170,566 from holding Korea Air Svc or generate 27.68% 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. System and Application
Performance |
| Timeline |
| Korea Air Svc |
| System and Application |
Korea Air and System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and System
The main advantage of trading using opposite Korea Air and System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, System 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 System will offset losses from the drop in System'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 |
| System vs. Daejung Chemicals Metals | System vs. MetaLabs Co | System vs. Duksan Hi Metal | System vs. Yura Tech 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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