Correlation Between Air Busan and Kolon Plastics
Can any of the company-specific risk be diversified away by investing in both Air Busan and Kolon Plastics 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 Kolon Plastics 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 Kolon Plastics, you can compare the effects of market volatilities on Air Busan and Kolon Plastics 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 Kolon Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Kolon Plastics.
Diversification Opportunities for Air Busan and Kolon Plastics
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Kolon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Kolon Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Plastics 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 Kolon Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Plastics has no effect on the direction of Air Busan i.e., Air Busan and Kolon Plastics go up and down completely randomly.
Pair Corralation between Air Busan and Kolon Plastics
Assuming the 90 days trading horizon Air Busan Co is expected to generate 1.08 times more return on investment than Kolon Plastics. However, Air Busan is 1.08 times more volatile than Kolon Plastics. It trades about 0.19 of its potential returns per unit of risk. Kolon Plastics is currently generating about 0.02 per unit of risk. If you would invest 226,500 in Air Busan Co on November 3, 2024 and sell it today you would earn a total of 13,000 from holding Air Busan Co or generate 5.74% 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. Kolon Plastics
Performance |
| Timeline |
| Air Busan |
| Kolon Plastics |
Air Busan and Kolon Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Kolon Plastics
The main advantage of trading using opposite Air Busan and Kolon Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Kolon Plastics 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 Kolon Plastics will offset losses from the drop in Kolon Plastics' long position.| Air Busan vs. Insun Environment New | Air Busan vs. BooKook Steel Co | Air Busan vs. Moonbae Steel | Air Busan vs. Nable Communications |
| Kolon Plastics vs. Camus Engineering Construction | Kolon Plastics vs. Seoam Machinery Industry | Kolon Plastics vs. Seohee Construction Co | Kolon Plastics vs. Woori Financial Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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