Correlation Between Tae Kyung and Korean Air
Can any of the company-specific risk be diversified away by investing in both Tae Kyung 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 Tae Kyung and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and Korean Air Lines, you can compare the effects of market volatilities on Tae Kyung 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 Tae Kyung with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Korean Air.
Diversification Opportunities for Tae Kyung and Korean Air
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tae and Korean is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical 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 Tae Kyung 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 Tae Kyung Chemical 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 Tae Kyung i.e., Tae Kyung and Korean Air go up and down completely randomly.
Pair Corralation between Tae Kyung and Korean Air
Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 1.11 times more return on investment than Korean Air. However, Tae Kyung is 1.11 times more volatile than Korean Air Lines. It trades about 0.04 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 1,100,229 in Tae Kyung Chemical on October 17, 2024 and sell it today you would earn a total of 15,771 from holding Tae Kyung Chemical or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. Korean Air Lines
Performance |
| Timeline |
| Tae Kyung Chemical |
| Korean Air Lines |
Tae Kyung and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and Korean Air
The main advantage of trading using opposite Tae Kyung and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung 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.| Tae Kyung vs. BIT Computer Co | Tae Kyung vs. Nable Communications | Tae Kyung vs. Hanjoo Light Metal | Tae Kyung vs. Innowireless Co |
| 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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