Correlation Between Daejung Chemicals and Korean Air
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Korean Air Lines, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Korean Air.
Diversification Opportunities for Daejung Chemicals and Korean Air
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daejung and Korean is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals 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 Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and Korean Air go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Korean Air
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Korean Air. In addition to that, Daejung Chemicals is 1.43 times more volatile than Korean Air Lines. It trades about -0.03 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.03 per unit of volatility. If you would invest 2,140,938 in Korean Air Lines on September 19, 2024 and sell it today you would earn a total of 274,062 from holding Korean Air Lines or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Korean Air Lines
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Korean Air Lines |
Daejung Chemicals and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Korean Air
The main advantage of trading using opposite Daejung Chemicals and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. LIG ES SPAC |
| Korean Air vs. E Investment Development | Korean Air vs. Daejung Chemicals Metals | Korean Air vs. KTB Investment Securities | Korean Air vs. SBI Investment KOREA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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