Correlation Between ICD and Korean Air
Can any of the company-specific risk be diversified away by investing in both ICD 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 ICD and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and Korean Air Lines, you can compare the effects of market volatilities on ICD 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 ICD with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD and Korean Air.
Diversification Opportunities for ICD and Korean Air
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ICD and Korean is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ICD Co 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 ICD 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 ICD Co 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 ICD i.e., ICD and Korean Air go up and down completely randomly.
Pair Corralation between ICD and Korean Air
Assuming the 90 days trading horizon ICD Co is expected to under-perform the Korean Air. In addition to that, ICD is 5.75 times more volatile than Korean Air Lines. It trades about -0.02 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.07 per unit of volatility. If you would invest 2,355,000 in Korean Air Lines on August 27, 2024 and sell it today you would earn a total of 15,000 from holding Korean Air Lines or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICD Co vs. Korean Air Lines
Performance |
| Timeline |
| ICD Co |
| Korean Air Lines |
ICD and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICD and Korean Air
The main advantage of trading using opposite ICD and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD 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.| ICD vs. Samsung Electronics Co | ICD vs. Samsung Electronics Co | ICD vs. LG Energy Solution | ICD vs. SK Hynix |
| Korean Air vs. Busan Industrial Co | Korean Air vs. Busan Ind | Korean Air vs. Mirae Asset Daewoo | Korean Air vs. UNISEM Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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