Correlation Between Air Busan and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both Air Busan and KEPCO Engineering 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 KEPCO Engineering 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 KEPCO Engineering Construction, you can compare the effects of market volatilities on Air Busan and KEPCO Engineering 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 KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and KEPCO Engineering.
Diversification Opportunities for Air Busan and KEPCO Engineering
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and KEPCO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering 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 KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of Air Busan i.e., Air Busan and KEPCO Engineering go up and down completely randomly.
Pair Corralation between Air Busan and KEPCO Engineering
Assuming the 90 days trading horizon Air Busan Co is expected to generate 0.6 times more return on investment than KEPCO Engineering. However, Air Busan Co is 1.68 times less risky than KEPCO Engineering. It trades about -0.03 of its potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.05 per unit of risk. If you would invest 236,500 in Air Busan Co on October 18, 2024 and sell it today you would lose (11,500) from holding Air Busan Co or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. KEPCO Engineering Construction
Performance |
| Timeline |
| Air Busan |
| KEPCO Engineering |
Air Busan and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and KEPCO Engineering
The main advantage of trading using opposite Air Busan and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| Air Busan vs. Hwangkum Steel Technology | Air Busan vs. Finebesteel | Air Busan vs. FNSTech Co | Air Busan vs. Insun Environment New |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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