Correlation Between Asiana Airlines and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Asiana Airlines and Hankuk Steel 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 Asiana Airlines and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiana Airlines and Hankuk Steel Wire, you can compare the effects of market volatilities on Asiana Airlines and Hankuk Steel 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 Asiana Airlines with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and Hankuk Steel.
Diversification Opportunities for Asiana Airlines and Hankuk Steel
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asiana and Hankuk is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Asiana Airlines 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 Asiana Airlines are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and Hankuk Steel go up and down completely randomly.
Pair Corralation between Asiana Airlines and Hankuk Steel
Assuming the 90 days trading horizon Asiana Airlines is expected to generate 1.22 times more return on investment than Hankuk Steel. However, Asiana Airlines is 1.22 times more volatile than Hankuk Steel Wire. It trades about 0.23 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.18 per unit of risk. If you would invest 994,000 in Asiana Airlines on August 29, 2024 and sell it today you would earn a total of 105,000 from holding Asiana Airlines or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asiana Airlines vs. Hankuk Steel Wire
Performance |
| Timeline |
| Asiana Airlines |
| Hankuk Steel Wire |
Asiana Airlines and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asiana Airlines and Hankuk Steel
The main advantage of trading using opposite Asiana Airlines and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiana Airlines position performs unexpectedly, Hankuk Steel 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| Asiana Airlines vs. Home Center Holdings | Asiana Airlines vs. Hyunwoo Industrial Co | Asiana Airlines vs. Daelim Industrial Co | Asiana Airlines vs. Seoyon Topmetal Co |
| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. Lotte Chemical Corp | Hankuk Steel vs. Hyundai Steel | Hankuk Steel vs. Seah Steel Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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