Correlation Between Total Soft and Korean Air
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and Korean Air Lines, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Korean Air.
Diversification Opportunities for Total Soft and Korean Air
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Total and Korean is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank 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 Total Soft 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 Total Soft Bank 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 Total Soft i.e., Total Soft and Korean Air go up and down completely randomly.
Pair Corralation between Total Soft and Korean Air
Assuming the 90 days trading horizon Total Soft Bank is expected to under-perform the Korean Air. In addition to that, Total Soft is 4.91 times more volatile than Korean Air Lines. It trades about -0.09 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.21 per unit of volatility. If you would invest 2,435,000 in Korean Air Lines on September 3, 2024 and sell it today you would earn a total of 160,000 from holding Korean Air Lines or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. Korean Air Lines
Performance |
| Timeline |
| Total Soft Bank |
| Korean Air Lines |
Total Soft and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and Korean Air
The main advantage of trading using opposite Total Soft and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Hanmi Semiconductor Co | Total Soft vs. Iljin Display | Total Soft vs. Dongbang Transport Logistics | Total Soft vs. Daol Investment Securities |
| Korean Air vs. INFINITT Healthcare Co | Korean Air vs. Daiyang Metal Co | Korean Air vs. Youngsin Metal Industrial | Korean Air vs. Osang Healthcare Co,Ltd |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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