Correlation Between Korea Air and Hironic
Can any of the company-specific risk be diversified away by investing in both Korea Air and Hironic 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 Hironic 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 Hironic Co, you can compare the effects of market volatilities on Korea Air and Hironic 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 Hironic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Hironic.
Diversification Opportunities for Korea Air and Hironic
Weak diversification
The 3 months correlation between Korea and Hironic is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Hironic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hironic 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 Hironic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hironic has no effect on the direction of Korea Air i.e., Korea Air and Hironic go up and down completely randomly.
Pair Corralation between Korea Air and Hironic
Assuming the 90 days trading horizon Korea Air Svc is expected to under-perform the Hironic. But the stock apears to be less risky and, when comparing its historical volatility, Korea Air Svc is 1.09 times less risky than Hironic. The stock trades about -0.21 of its potential returns per unit of risk. The Hironic Co is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 666,000 in Hironic Co on November 7, 2024 and sell it today you would lose (41,000) from holding Hironic Co or give up 6.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Hironic Co
Performance |
| Timeline |
| Korea Air Svc |
| Hironic |
Korea Air and Hironic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Hironic
The main advantage of trading using opposite Korea Air and Hironic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Hironic 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 Hironic will offset losses from the drop in Hironic's long position.| Korea Air vs. Dongil Metal Co | Korea Air vs. Aprogen Healthcare Games | Korea Air vs. Clean Science co | Korea Air vs. Formetal Co |
| Hironic vs. Daishin Information Communications | Hironic vs. Daeduck Electronics Co | Hironic vs. Sejong Telecom | Hironic vs. Nice Information Telecommunication |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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