Correlation Between Samsung Electronics and Korea Air
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Korea Air 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 Samsung Electronics and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Korea Air Svc, you can compare the effects of market volatilities on Samsung Electronics and Korea Air 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 Samsung Electronics with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Korea Air.
Diversification Opportunities for Samsung Electronics and Korea Air
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Korea is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Korea Air go up and down completely randomly.
Pair Corralation between Samsung Electronics and Korea Air
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.72 times less return on investment than Korea Air. In addition to that, Samsung Electronics is 1.17 times more volatile than Korea Air Svc. It trades about 0.02 of its total potential returns per unit of risk. Korea Air Svc is currently generating about 0.04 per unit of volatility. If you would invest 5,620,000 in Korea Air Svc on August 29, 2024 and sell it today you would earn a total of 80,000 from holding Korea Air Svc or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Korea Air Svc
Performance |
| Timeline |
| Samsung Electronics |
| Korea Air Svc |
Samsung Electronics and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Korea Air
The main advantage of trading using opposite Samsung Electronics and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Korea Air 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 Air will offset losses from the drop in Korea Air's long position.| Samsung Electronics vs. Lotte Fine Chemical | Samsung Electronics vs. SH Energy Chemical | Samsung Electronics vs. Hansol Chemical Co | Samsung Electronics vs. Youngchang Chemical Co |
| Korea Air vs. SBI Investment KOREA | Korea Air vs. Stic Investments | Korea Air vs. E Investment Development | Korea Air vs. NH Investment Securities |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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