Correlation Between NH Investment and Korean Air
Can any of the company-specific risk be diversified away by investing in both NH Investment and Korean 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 NH Investment and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Investment Securities and Korean Air Lines, you can compare the effects of market volatilities on NH Investment and Korean 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 NH Investment with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Korean Air.
Diversification Opportunities for NH Investment and Korean Air
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 005940 and Korean is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Korean Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Air Lines and NH Investment 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 NH Investment Securities are associated (or correlated) with Korean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Air Lines has no effect on the direction of NH Investment i.e., NH Investment and Korean Air go up and down completely randomly.
Pair Corralation between NH Investment and Korean Air
Assuming the 90 days trading horizon NH Investment Securities is expected to generate 0.73 times more return on investment than Korean Air. However, NH Investment Securities is 1.36 times less risky than Korean Air. It trades about -0.03 of its potential returns per unit of risk. Korean Air Lines is currently generating about -0.2 per unit of risk. If you would invest 1,377,000 in NH Investment Securities on October 17, 2024 and sell it today you would lose (15,000) from holding NH Investment Securities or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Investment Securities vs. Korean Air Lines
Performance |
| Timeline |
| NH Investment Securities |
| Korean Air Lines |
NH Investment and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Investment and Korean Air
The main advantage of trading using opposite NH Investment and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment position performs unexpectedly, Korean 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 Korean Air will offset losses from the drop in Korean Air's long position.| NH Investment vs. Woorim Machinery Co | NH Investment vs. SEOJEON ELECTRIC MACHINERY | NH Investment vs. Hyundai Engineering Construction | NH Investment vs. LG Household Healthcare |
| Korean Air vs. NH Investment Securities | Korean Air vs. DB Financial Investment | Korean Air vs. BGF Retail Co | Korean Air vs. Tae Kyung Chemical |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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