Correlation Between Korea Aerospace and Korea Air
Can any of the company-specific risk be diversified away by investing in both Korea Aerospace and Korea 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 Korea Aerospace and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Aerospace Industries and Korea Air Svc, you can compare the effects of market volatilities on Korea Aerospace and Korea 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 Korea Aerospace with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Aerospace and Korea Air.
Diversification Opportunities for Korea Aerospace and Korea Air
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Korea is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Korea Aerospace Industries and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and Korea Aerospace 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 Korea Aerospace Industries are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Korea Aerospace i.e., Korea Aerospace and Korea Air go up and down completely randomly.
Pair Corralation between Korea Aerospace and Korea Air
Assuming the 90 days trading horizon Korea Aerospace Industries is expected to generate 0.78 times more return on investment than Korea Air. However, Korea Aerospace Industries is 1.28 times less risky than Korea Air. It trades about -0.17 of its potential returns per unit of risk. Korea Air Svc is currently generating about -0.16 per unit of risk. If you would invest 5,580,000 in Korea Aerospace Industries on November 3, 2024 and sell it today you would lose (250,000) from holding Korea Aerospace Industries or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Aerospace Industries vs. Korea Air Svc
Performance |
| Timeline |
| Korea Aerospace Indu |
| Korea Air Svc |
Korea Aerospace and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Aerospace and Korea Air
The main advantage of trading using opposite Korea Aerospace and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Aerospace position performs unexpectedly, Korea 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 Korea Air will offset losses from the drop in Korea Air's long position.| Korea Aerospace vs. Hanmi Semiconductor Co | Korea Aerospace vs. Dongil Metal Co | Korea Aerospace vs. Daejung Chemicals Metals | Korea Aerospace vs. Organic Special Pet |
| Korea Air vs. EBEST Investment Securities | Korea Air vs. KTB Investment Securities | Korea Air vs. Coloray International Investment | Korea Air vs. SV Investment |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |