Correlation Between Air Busan and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Air Busan and Kumho Industrial 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 Air Busan and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Busan Co and Kumho Industrial Co, you can compare the effects of market volatilities on Air Busan and Kumho Industrial 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 Air Busan with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Kumho Industrial.
Diversification Opportunities for Air Busan and Kumho Industrial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Kumho is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Air Busan 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 Air Busan Co are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Air Busan i.e., Air Busan and Kumho Industrial go up and down completely randomly.
Pair Corralation between Air Busan and Kumho Industrial
Assuming the 90 days trading horizon Air Busan Co is expected to generate 1.2 times more return on investment than Kumho Industrial. However, Air Busan is 1.2 times more volatile than Kumho Industrial Co. It trades about -0.03 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.11 per unit of risk. If you would invest 314,000 in Air Busan Co on September 12, 2024 and sell it today you would lose (90,000) from holding Air Busan Co or give up 28.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. Kumho Industrial Co
Performance |
| Timeline |
| Air Busan |
| Kumho Industrial |
Air Busan and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Kumho Industrial
The main advantage of trading using opposite Air Busan and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Air Busan vs. Jin Air Co | Air Busan vs. Tway Air Co | Air Busan vs. Solution Advanced Technology | Air Busan vs. Busan Industrial Co |
| Kumho Industrial vs. Samsung Electronics Co | Kumho Industrial vs. Samsung Electronics Co | Kumho Industrial vs. SK Hynix | Kumho Industrial vs. POSCO Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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