Correlation Between Air Busan and Korea Air
Can any of the company-specific risk be diversified away by investing in both Air Busan and Korea 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 Air Busan and Korea Air 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 Korea Air Svc, you can compare the effects of market volatilities on Air Busan and Korea 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 Air Busan with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Korea Air.
Diversification Opportunities for Air Busan and Korea Air
Good diversification
The 3 months correlation between Air and Korea is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc 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 Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Air Busan i.e., Air Busan and Korea Air go up and down completely randomly.
Pair Corralation between Air Busan and Korea Air
Assuming the 90 days trading horizon Air Busan is expected to generate 2.6 times less return on investment than Korea Air. In addition to that, Air Busan is 1.06 times more volatile than Korea Air Svc. It trades about 0.02 of its total potential returns per unit of risk. Korea Air Svc is currently generating about 0.04 per unit of volatility. If you would invest 3,798,658 in Korea Air Svc on August 23, 2024 and sell it today you would earn a total of 1,531,342 from holding Korea Air Svc or generate 40.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. Korea Air Svc
Performance |
| Timeline |
| Air Busan |
| Korea Air Svc |
Air Busan and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Korea Air
The main advantage of trading using opposite Air Busan and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Korea 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 Korea Air will offset losses from the drop in Korea Air's long position.The idea behind Air Busan Co and Korea Air Svc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Korea Air vs. Xavis Co | Korea Air vs. Hurum Co | Korea Air vs. Daishin Balance No8 | Korea Air vs. Korea Real Estate |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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