Correlation Between Air Busan and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Air Busan and Korea Shipbuilding 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 Shipbuilding 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 Shipbuilding Offshore, you can compare the effects of market volatilities on Air Busan and Korea Shipbuilding 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 Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Korea Shipbuilding.
Diversification Opportunities for Air Busan and Korea Shipbuilding
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Korea is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding 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 Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of Air Busan i.e., Air Busan and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between Air Busan and Korea Shipbuilding
Assuming the 90 days trading horizon Air Busan Co is expected to under-perform the Korea Shipbuilding. But the stock apears to be less risky and, when comparing its historical volatility, Air Busan Co is 3.41 times less risky than Korea Shipbuilding. The stock trades about -0.27 of its potential returns per unit of risk. The Korea Shipbuilding Offshore is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 23,200,000 in Korea Shipbuilding Offshore on November 29, 2024 and sell it today you would lose (950,000) from holding Korea Shipbuilding Offshore or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| Air Busan |
| Korea Shipbuilding |
Air Busan and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Korea Shipbuilding
The main advantage of trading using opposite Air Busan and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Korea Shipbuilding 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 Shipbuilding will offset losses from the drop in Korea Shipbuilding's long position.| Air Busan vs. Insun Environment New | Air Busan vs. Histeel | Air Busan vs. SK Chemicals Co | Air Busan vs. Hironic Co |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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