Correlation Between Seoam Machinery and Korean Air
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery 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 Seoam Machinery and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoam Machinery Industry and Korean Air Lines, you can compare the effects of market volatilities on Seoam Machinery 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 Seoam Machinery with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and Korean Air.
Diversification Opportunities for Seoam Machinery and Korean Air
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seoam and Korean is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry 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 Seoam Machinery 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 Seoam Machinery Industry 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 Seoam Machinery i.e., Seoam Machinery and Korean Air go up and down completely randomly.
Pair Corralation between Seoam Machinery and Korean Air
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to generate 0.87 times more return on investment than Korean Air. However, Seoam Machinery Industry is 1.15 times less risky than Korean Air. It trades about 0.22 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 358,441 in Seoam Machinery Industry on October 14, 2024 and sell it today you would earn a total of 25,059 from holding Seoam Machinery Industry or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoam Machinery Industry vs. Korean Air Lines
Performance |
| Timeline |
| Seoam Machinery Industry |
| Korean Air Lines |
Seoam Machinery and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and Korean Air
The main advantage of trading using opposite Seoam Machinery and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery 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.| Seoam Machinery vs. Sungchang Autotech Co | Seoam Machinery vs. A Tech Solution Co | Seoam Machinery vs. Digital Imaging Technology | Seoam Machinery vs. FNSTech Co |
| Korean Air vs. Seoam Machinery Industry | Korean Air vs. Camus Engineering Construction | Korean Air vs. Nice Information Telecommunication | Korean Air vs. Kisan Telecom 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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