Correlation Between Korea Aerospace and Adaptive Plasma
Can any of the company-specific risk be diversified away by investing in both Korea Aerospace and Adaptive Plasma 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 Adaptive Plasma 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 Adaptive Plasma Technology, you can compare the effects of market volatilities on Korea Aerospace and Adaptive Plasma 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 Adaptive Plasma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Aerospace and Adaptive Plasma.
Diversification Opportunities for Korea Aerospace and Adaptive Plasma
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Adaptive is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea Aerospace Industries and Adaptive Plasma Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Plasma Tech 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 Adaptive Plasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Plasma Tech has no effect on the direction of Korea Aerospace i.e., Korea Aerospace and Adaptive Plasma go up and down completely randomly.
Pair Corralation between Korea Aerospace and Adaptive Plasma
Assuming the 90 days trading horizon Korea Aerospace Industries is expected to generate 0.65 times more return on investment than Adaptive Plasma. However, Korea Aerospace Industries is 1.54 times less risky than Adaptive Plasma. It trades about 0.06 of its potential returns per unit of risk. Adaptive Plasma Technology is currently generating about -0.12 per unit of risk. If you would invest 4,910,000 in Korea Aerospace Industries on September 4, 2024 and sell it today you would earn a total of 1,050,000 from holding Korea Aerospace Industries or generate 21.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Aerospace Industries vs. Adaptive Plasma Technology
Performance |
| Timeline |
| Korea Aerospace Indu |
| Adaptive Plasma Tech |
Korea Aerospace and Adaptive Plasma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Aerospace and Adaptive Plasma
The main advantage of trading using opposite Korea Aerospace and Adaptive Plasma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Aerospace position performs unexpectedly, Adaptive Plasma 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 Adaptive Plasma will offset losses from the drop in Adaptive Plasma's long position.| Korea Aerospace vs. LG Display | Korea Aerospace vs. Hyundai Motor | Korea Aerospace vs. Hyundai Motor Co | Korea Aerospace vs. Hyundai Motor Co |
| Adaptive Plasma vs. SK Hynix | Adaptive Plasma vs. LX Semicon Co | Adaptive Plasma vs. Tokai Carbon Korea | Adaptive Plasma vs. People Technology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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