Correlation Between Air Busan and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both Air Busan and Kyeryong Construction 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 Kyeryong Construction 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 Kyeryong Construction Industrial, you can compare the effects of market volatilities on Air Busan and Kyeryong Construction 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 Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Kyeryong Construction.
Diversification Opportunities for Air Busan and Kyeryong Construction
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Kyeryong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong Construction 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 Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Air Busan i.e., Air Busan and Kyeryong Construction go up and down completely randomly.
Pair Corralation between Air Busan and Kyeryong Construction
Assuming the 90 days trading horizon Air Busan Co is expected to under-perform the Kyeryong Construction. In addition to that, Air Busan is 1.21 times more volatile than Kyeryong Construction Industrial. It trades about -0.15 of its total potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about 0.03 per unit of volatility. If you would invest 1,315,000 in Kyeryong Construction Industrial on September 26, 2024 and sell it today you would earn a total of 9,000 from holding Kyeryong Construction Industrial or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. Kyeryong Construction Industri
Performance |
| Timeline |
| Air Busan |
| Kyeryong Construction |
Air Busan and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Kyeryong Construction
The main advantage of trading using opposite Air Busan and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Kyeryong Construction 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.The idea behind Air Busan Co and Kyeryong Construction Industrial 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.| Kyeryong Construction vs. AptaBio Therapeutics | Kyeryong Construction vs. Wonbang Tech Co | Kyeryong Construction vs. Busan Industrial Co | Kyeryong Construction vs. Busan Ind |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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