Correlation Between Korea Air and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both Korea Air and Dongbang Ship 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 Dongbang Ship 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 Dongbang Ship Machinery, you can compare the effects of market volatilities on Korea Air and Dongbang Ship 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 Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Dongbang Ship.
Diversification Opportunities for Korea Air and Dongbang Ship
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Dongbang is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Dongbang Ship Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Ship 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 Dongbang Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Ship Machinery has no effect on the direction of Korea Air i.e., Korea Air and Dongbang Ship go up and down completely randomly.
Pair Corralation between Korea Air and Dongbang Ship
Assuming the 90 days trading horizon Korea Air Svc is expected to generate 0.77 times more return on investment than Dongbang Ship. However, Korea Air Svc is 1.3 times less risky than Dongbang Ship. It trades about -0.02 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about -0.03 per unit of risk. If you would invest 5,670,000 in Korea Air Svc on September 1, 2024 and sell it today you would lose (100,000) from holding Korea Air Svc or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Dongbang Ship Machinery
Performance |
| Timeline |
| Korea Air Svc |
| Dongbang Ship Machinery |
Korea Air and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Dongbang Ship
The main advantage of trading using opposite Korea Air and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Dongbang Ship 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 Dongbang Ship will offset losses from the drop in Dongbang Ship's long position.| Korea Air vs. Korea New Network | Korea Air vs. ICD Co | Korea Air vs. DYPNF CoLtd | Korea Air vs. Busan Industrial Co |
| Dongbang Ship vs. Korea New Network | Dongbang Ship vs. ICD Co | Dongbang Ship vs. DYPNF CoLtd | Dongbang Ship vs. Busan Industrial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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