Correlation Between Korea Air and Air Busan
Can any of the company-specific risk be diversified away by investing in both Korea Air and Air Busan 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 Air Busan 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 Air Busan Co, you can compare the effects of market volatilities on Korea Air and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and Air Busan.
Diversification Opportunities for Korea Air and Air Busan
Pay attention - limited upside
The 3 months correlation between Korea and Air is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Korea Air i.e., Korea Air and Air Busan go up and down completely randomly.
Pair Corralation between Korea Air and Air Busan
Assuming the 90 days trading horizon Korea Air Svc is expected to under-perform the Air Busan. But the stock apears to be less risky and, when comparing its historical volatility, Korea Air Svc is 1.07 times less risky than Air Busan. The stock trades about -0.37 of its potential returns per unit of risk. The Air Busan Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 230,000 in Air Busan Co on November 18, 2024 and sell it today you would lose (2,000) from holding Air Busan Co or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Air Svc vs. Air Busan Co
Performance |
| Timeline |
| Korea Air Svc |
| Air Busan |
Korea Air and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Air and Air Busan
The main advantage of trading using opposite Korea Air and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| Korea Air vs. LEENO Industrial | Korea Air vs. Hyundai Industrial Co | Korea Air vs. Korea Industrial Co | Korea Air vs. Kukdo Chemical Co |
| Air Busan vs. Daewon Media Co | Air Busan vs. ChipsMedia | Air Busan vs. Taegu Broadcasting | Air Busan vs. Woori Financial Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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