Correlation Between KTB Investment and Korean Air
Can any of the company-specific risk be diversified away by investing in both KTB 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 KTB 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 KTB Investment Securities and Korean Air Lines, you can compare the effects of market volatilities on KTB 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 KTB Investment with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTB Investment and Korean Air.
Diversification Opportunities for KTB Investment and Korean Air
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KTB and Korean is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding KTB 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 KTB 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 KTB 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 KTB Investment i.e., KTB Investment and Korean Air go up and down completely randomly.
Pair Corralation between KTB Investment and Korean Air
Assuming the 90 days trading horizon KTB Investment Securities is expected to generate 0.95 times more return on investment than Korean Air. However, KTB Investment Securities is 1.05 times less risky than Korean Air. It trades about 0.09 of its potential returns per unit of risk. Korean Air Lines is currently generating about 0.02 per unit of risk. If you would invest 264,000 in KTB Investment Securities on September 20, 2024 and sell it today you would earn a total of 9,000 from holding KTB Investment Securities or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KTB Investment Securities vs. Korean Air Lines
Performance |
| Timeline |
| KTB Investment Securities |
| Korean Air Lines |
KTB Investment and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KTB Investment and Korean Air
The main advantage of trading using opposite KTB Investment and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KTB 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.| KTB Investment vs. Samsung Electronics Co | KTB Investment vs. Samsung Electronics Co | KTB Investment vs. SK Hynix | KTB Investment vs. POSCO Holdings |
| Korean Air vs. Korea New Network | Korean Air vs. Solution Advanced Technology | Korean Air vs. Busan Industrial Co | Korean Air vs. Busan Ind |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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