Correlation Between CJ Cheiljedang and Korean Air
Can any of the company-specific risk be diversified away by investing in both CJ Cheiljedang 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 CJ Cheiljedang and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ Cheiljedang and Korean Air Lines, you can compare the effects of market volatilities on CJ Cheiljedang 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 CJ Cheiljedang with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Cheiljedang and Korean Air.
Diversification Opportunities for CJ Cheiljedang and Korean Air
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 097950 and Korean is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CJ Cheiljedang 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 CJ Cheiljedang 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 CJ Cheiljedang 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 CJ Cheiljedang i.e., CJ Cheiljedang and Korean Air go up and down completely randomly.
Pair Corralation between CJ Cheiljedang and Korean Air
Assuming the 90 days trading horizon CJ Cheiljedang is expected to generate 6.51 times less return on investment than Korean Air. In addition to that, CJ Cheiljedang is 1.55 times more volatile than Korean Air Lines. It trades about 0.02 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.18 per unit of volatility. If you would invest 2,370,000 in Korean Air Lines on August 29, 2024 and sell it today you would earn a total of 155,000 from holding Korean Air Lines or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ Cheiljedang vs. Korean Air Lines
Performance |
| Timeline |
| CJ Cheiljedang |
| Korean Air Lines |
CJ Cheiljedang and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Cheiljedang and Korean Air
The main advantage of trading using opposite CJ Cheiljedang and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Cheiljedang 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.| CJ Cheiljedang vs. Samsung Electronics Co | CJ Cheiljedang vs. Samsung Electronics Co | CJ Cheiljedang vs. Hyundai Motor Co | CJ Cheiljedang vs. Hyundai Motor |
| Korean Air vs. Dongbu Insurance Co | Korean Air vs. Dongkuk Structures Construction | Korean Air vs. Samsung Life Insurance | Korean Air vs. SEOJEON ELECTRIC MACHINERY |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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