Correlation Between Pyung Hwa and Korean Air
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa 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 Pyung Hwa and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyung Hwa Industrial and Korean Air Lines, you can compare the effects of market volatilities on Pyung Hwa 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 Pyung Hwa with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and Korean Air.
Diversification Opportunities for Pyung Hwa and Korean Air
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pyung and Korean is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial 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 Pyung Hwa 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 Pyung Hwa Industrial 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 Pyung Hwa i.e., Pyung Hwa and Korean Air go up and down completely randomly.
Pair Corralation between Pyung Hwa and Korean Air
Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to generate 3.07 times more return on investment than Korean Air. However, Pyung Hwa is 3.07 times more volatile than Korean Air Lines. It trades about 0.23 of its potential returns per unit of risk. Korean Air Lines is currently generating about -0.18 per unit of risk. If you would invest 90,100 in Pyung Hwa Industrial on October 15, 2024 and sell it today you would earn a total of 9,800 from holding Pyung Hwa Industrial or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pyung Hwa Industrial vs. Korean Air Lines
Performance |
| Timeline |
| Pyung Hwa Industrial |
| Korean Air Lines |
Pyung Hwa and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and Korean Air
The main advantage of trading using opposite Pyung Hwa and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa 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.| Pyung Hwa vs. N2Tech Co | Pyung Hwa vs. Hankook Furniture Co | Pyung Hwa vs. KMH Hitech Co | Pyung Hwa vs. Hanil Chemical Ind |
| Korean Air vs. Jin Air Co | Korean Air vs. Air Busan Co | Korean Air vs. Tway Air Co | Korean 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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