Correlation Between Taewoong Logistics and Korean Air
Can any of the company-specific risk be diversified away by investing in both Taewoong Logistics 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 Taewoong Logistics and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taewoong Logistics CoLtd and Korean Air Lines, you can compare the effects of market volatilities on Taewoong Logistics 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 Taewoong Logistics with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taewoong Logistics and Korean Air.
Diversification Opportunities for Taewoong Logistics and Korean Air
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taewoong and Korean is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong Logistics CoLtd 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 Taewoong Logistics 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 Taewoong Logistics CoLtd 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 Taewoong Logistics i.e., Taewoong Logistics and Korean Air go up and down completely randomly.
Pair Corralation between Taewoong Logistics and Korean Air
Assuming the 90 days trading horizon Taewoong Logistics CoLtd is expected to generate 1.27 times more return on investment than Korean Air. However, Taewoong Logistics is 1.27 times more volatile than Korean Air Lines. It trades about 0.19 of its potential returns per unit of risk. Korean Air Lines is currently generating about 0.19 per unit of risk. If you would invest 285,500 in Taewoong Logistics CoLtd on August 29, 2024 and sell it today you would earn a total of 24,500 from holding Taewoong Logistics CoLtd or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taewoong Logistics CoLtd vs. Korean Air Lines
Performance |
| Timeline |
| Taewoong Logistics CoLtd |
| Korean Air Lines |
Taewoong Logistics and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taewoong Logistics and Korean Air
The main advantage of trading using opposite Taewoong Logistics and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taewoong Logistics 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.| Taewoong Logistics vs. Busan Industrial Co | Taewoong Logistics vs. Busan Ind | Taewoong Logistics vs. Mirae Asset Daewoo | Taewoong Logistics vs. Shinhan WTI Futures |
| Korean Air vs. Samsung Electronics Co | Korean Air vs. Samsung Electronics Co | Korean Air vs. Hyundai Motor Co | Korean Air vs. Hyundai Motor |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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