Correlation Between Miwon Chemical and Korean Air
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical 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 Miwon Chemical and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Korean Air Lines, you can compare the effects of market volatilities on Miwon Chemical 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 Miwon Chemical with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Korean Air.
Diversification Opportunities for Miwon Chemical and Korean Air
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Miwon and Korean is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical i.e., Miwon Chemical and Korean Air go up and down completely randomly.
Pair Corralation between Miwon Chemical and Korean Air
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.65 times more return on investment than Korean Air. However, Miwon Chemical is 1.53 times less risky than Korean Air. It trades about 0.15 of its potential returns per unit of risk. Korean Air Lines is currently generating about 0.0 per unit of risk. If you would invest 7,790,000 in Miwon Chemical on September 19, 2024 and sell it today you would earn a total of 320,000 from holding Miwon Chemical or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Korean Air Lines
Performance |
| Timeline |
| Miwon Chemical |
| Korean Air Lines |
Miwon Chemical and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Korean Air
The main advantage of trading using opposite Miwon Chemical and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical 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.| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. DukSan Neolux CoLtd | Miwon Chemical 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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