Correlation Between Formetal and Korea Air
Can any of the company-specific risk be diversified away by investing in both Formetal 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 Formetal and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Korea Air Svc, you can compare the effects of market volatilities on Formetal 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 Formetal with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Korea Air.
Diversification Opportunities for Formetal and Korea Air
Very good diversification
The 3 months correlation between Formetal and Korea is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co 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 Formetal 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 Formetal Co 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 Formetal i.e., Formetal and Korea Air go up and down completely randomly.
Pair Corralation between Formetal and Korea Air
Assuming the 90 days trading horizon Formetal Co is expected to under-perform the Korea Air. In addition to that, Formetal is 3.12 times more volatile than Korea Air Svc. It trades about -0.08 of its total potential returns per unit of risk. Korea Air Svc is currently generating about 0.06 per unit of volatility. If you would invest 5,270,000 in Korea Air Svc on November 27, 2024 and sell it today you would earn a total of 70,000 from holding Korea Air Svc or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Korea Air Svc
Performance |
| Timeline |
| Formetal |
| Korea Air Svc |
Formetal and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Korea Air
The main advantage of trading using opposite Formetal and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal 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.| Formetal vs. Korea Air Svc | Formetal vs. BNK Financial Group | Formetal vs. ITM Semiconductor Co | Formetal vs. Jeju Air Co |
| Korea Air vs. Daishin Information Communications | Korea Air vs. FOODWELL Co | Korea Air vs. BIT Computer Co | Korea Air vs. Haitai Confectionery Foods |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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