Correlation Between Sempio Foods and Korean Air
Can any of the company-specific risk be diversified away by investing in both Sempio Foods 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 Sempio Foods and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempio Foods Co and Korean Air Lines, you can compare the effects of market volatilities on Sempio Foods 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 Sempio Foods with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempio Foods and Korean Air.
Diversification Opportunities for Sempio Foods and Korean Air
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sempio and Korean is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co 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 Sempio Foods 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 Sempio Foods Co 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 Sempio Foods i.e., Sempio Foods and Korean Air go up and down completely randomly.
Pair Corralation between Sempio Foods and Korean Air
Assuming the 90 days trading horizon Sempio Foods is expected to generate 1.91 times less return on investment than Korean Air. In addition to that, Sempio Foods is 2.08 times more volatile than Korean Air Lines. It trades about 0.0 of its total potential returns per unit of risk. Korean Air Lines is currently generating about 0.01 per unit of volatility. If you would invest 2,266,875 in Korean Air Lines on November 7, 2024 and sell it today you would earn a total of 93,125 from holding Korean Air Lines or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempio Foods Co vs. Korean Air Lines
Performance |
| Timeline |
| Sempio Foods |
| Korean Air Lines |
Sempio Foods and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempio Foods and Korean Air
The main advantage of trading using opposite Sempio Foods and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods 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.| Sempio Foods vs. Daejung Chemicals Metals | Sempio Foods vs. Hannong Chemicals | Sempio Foods vs. Eugene Technology CoLtd | Sempio Foods vs. ENF Technology Co |
| Korean Air vs. NewFlex Technology Co | Korean Air vs. Settlebank | Korean Air vs. Eugene Technology CoLtd | Korean Air vs. Dongbu Insurance Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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