Correlation Between Korea New and Korean Air
Can any of the company-specific risk be diversified away by investing in both Korea New 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 Korea New and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Korean Air Lines, you can compare the effects of market volatilities on Korea New 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 Korea New with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Korean Air.
Diversification Opportunities for Korea New and Korean Air
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Korean is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network 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 Korea New 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 New Network 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 Korea New i.e., Korea New and Korean Air go up and down completely randomly.
Pair Corralation between Korea New and Korean Air
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Korean Air. In addition to that, Korea New is 1.49 times more volatile than Korean Air Lines. It trades about 0.0 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.01 per unit of volatility. If you would invest 2,360,898 in Korean Air Lines on August 27, 2024 and sell it today you would earn a total of 69,102 from holding Korean Air Lines or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Korean Air Lines
Performance |
| Timeline |
| Korea New Network |
| Korean Air Lines |
Korea New and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Korean Air
The main advantage of trading using opposite Korea New and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New 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.| Korea New vs. Korean Air Lines | Korea New vs. Hanjoo Light Metal | Korea New vs. Jeju Air Co | Korea New vs. Daedong Metals Co |
| Korean Air vs. Samsung Electronics Co | Korean Air vs. Samsung Electronics Co | Korean Air vs. Hyundai Motor Co | Korean Air vs. Hyundai Motor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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