Correlation Between Aurora World and Korean Air
Can any of the company-specific risk be diversified away by investing in both Aurora World 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 Aurora World and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora World and Korean Air Lines, you can compare the effects of market volatilities on Aurora World 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 Aurora World with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora World and Korean Air.
Diversification Opportunities for Aurora World and Korean Air
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Korean is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aurora World 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 Aurora World 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 Aurora World 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 Aurora World i.e., Aurora World and Korean Air go up and down completely randomly.
Pair Corralation between Aurora World and Korean Air
Assuming the 90 days trading horizon Aurora World is expected to generate 0.78 times more return on investment than Korean Air. However, Aurora World is 1.29 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 -0.05 per unit of risk. If you would invest 606,000 in Aurora World on September 24, 2024 and sell it today you would earn a total of 4,000 from holding Aurora World or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora World vs. Korean Air Lines
Performance |
| Timeline |
| Aurora World |
| Korean Air Lines |
Aurora World and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora World and Korean Air
The main advantage of trading using opposite Aurora World and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora World 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.| Aurora World vs. Woori Technology Investment | Aurora World vs. Samsung Card Co | Aurora World vs. Korea Real Estate | Aurora World vs. CHOROKBAEM PANY Co |
| Korean Air vs. LG Display Co | Korean Air vs. Woori Technology Investment | Korean Air vs. KTB Investment Securities | Korean Air vs. Korea Computer |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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