Correlation Between PI Advanced and Korean Air
Can any of the company-specific risk be diversified away by investing in both PI Advanced 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 PI Advanced and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PI Advanced Materials and Korean Air Lines, you can compare the effects of market volatilities on PI Advanced 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 PI Advanced with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of PI Advanced and Korean Air.
Diversification Opportunities for PI Advanced and Korean Air
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 178920 and Korean is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials 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 PI Advanced 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 PI Advanced Materials 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 PI Advanced i.e., PI Advanced and Korean Air go up and down completely randomly.
Pair Corralation between PI Advanced and Korean Air
Assuming the 90 days trading horizon PI Advanced Materials is expected to generate 1.7 times more return on investment than Korean Air. However, PI Advanced is 1.7 times more volatile than Korean Air Lines. It trades about 0.15 of its potential returns per unit of risk. Korean Air Lines is currently generating about -0.21 per unit of risk. If you would invest 1,680,000 in PI Advanced Materials on October 17, 2024 and sell it today you would earn a total of 150,000 from holding PI Advanced Materials or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PI Advanced Materials vs. Korean Air Lines
Performance |
| Timeline |
| PI Advanced Materials |
| Korean Air Lines |
PI Advanced and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PI Advanced and Korean Air
The main advantage of trading using opposite PI Advanced and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced 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.| PI Advanced vs. Ecoplastic | PI Advanced vs. Alton Sports CoLtd | PI Advanced vs. Daejoo Electronic Materials | PI Advanced vs. Ssangyong Materials Corp |
| Korean Air vs. National Plastic Co | Korean Air vs. PI Advanced Materials | Korean Air vs. LS Materials | Korean Air vs. Kolon Plastics |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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