Correlation Between Asiana Airlines and System
Can any of the company-specific risk be diversified away by investing in both Asiana Airlines and System 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 System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiana Airlines and System and Application, you can compare the effects of market volatilities on Asiana Airlines and System 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 System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and System.
Diversification Opportunities for Asiana Airlines and System
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asiana and System is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and System go up and down completely randomly.
Pair Corralation between Asiana Airlines and System
Assuming the 90 days trading horizon Asiana Airlines is expected to generate 1.22 times less return on investment than System. But when comparing it to its historical volatility, Asiana Airlines is 1.9 times less risky than System. It trades about 0.08 of its potential returns per unit of risk. System and Application is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 142,954 in System and Application on October 24, 2024 and sell it today you would earn a total of 10,846 from holding System and Application or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asiana Airlines vs. System and Application
Performance |
| Timeline |
| Asiana Airlines |
| System and Application |
Asiana Airlines and System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asiana Airlines and System
The main advantage of trading using opposite Asiana Airlines and System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiana Airlines position performs unexpectedly, System 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 System will offset losses from the drop in System's long position.| Asiana Airlines vs. DB Insurance Co | Asiana Airlines vs. Samick Musical Instruments | Asiana Airlines vs. KakaoBank Corp | Asiana Airlines vs. Shinhan 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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