Correlation Between Korea New and Korea Air
Can any of the company-specific risk be diversified away by investing in both Korea New 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 New 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 New Network and Korea Air Svc, you can compare the effects of market volatilities on Korea New 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 New with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Korea Air.
Diversification Opportunities for Korea New and Korea Air
Poor diversification
The 3 months correlation between Korea and Korea is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network 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 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 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 New i.e., Korea New and Korea Air go up and down completely randomly.
Pair Corralation between Korea New and Korea Air
Assuming the 90 days trading horizon Korea New Network is expected to generate 0.6 times more return on investment than Korea Air. However, Korea New Network is 1.66 times less risky than Korea Air. It trades about -0.04 of its potential returns per unit of risk. Korea Air Svc is currently generating about -0.05 per unit of risk. If you would invest 85,500 in Korea New Network on August 31, 2024 and sell it today you would lose (8,400) from holding Korea New Network or give up 9.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Korea Air Svc
Performance |
| Timeline |
| Korea New Network |
| Korea Air Svc |
Korea New and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Korea Air
The main advantage of trading using opposite Korea New and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New 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 New vs. Ilji Technology Co | Korea New vs. Raontech | Korea New vs. HB Technology TD | Korea New vs. Koh Young Technology |
| Korea Air vs. Korea New Network | Korea Air vs. ICD Co | Korea Air vs. DYPNF CoLtd | Korea Air vs. Busan Industrial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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