Correlation Between Air Busan and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Air Busan and Hana Materials 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 Hana Materials 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 Hana Materials, you can compare the effects of market volatilities on Air Busan and Hana Materials 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 Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Hana Materials.
Diversification Opportunities for Air Busan and Hana Materials
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Hana is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Air Busan i.e., Air Busan and Hana Materials go up and down completely randomly.
Pair Corralation between Air Busan and Hana Materials
Assuming the 90 days trading horizon Air Busan Co is expected to under-perform the Hana Materials. But the stock apears to be less risky and, when comparing its historical volatility, Air Busan Co is 4.89 times less risky than Hana Materials. The stock trades about -0.24 of its potential returns per unit of risk. The Hana Materials is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,460,000 in Hana Materials on November 27, 2024 and sell it today you would earn a total of 840,000 from holding Hana Materials or generate 34.15% 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. Hana Materials
Performance |
| Timeline |
| Air Busan |
| Hana Materials |
Air Busan and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Hana Materials
The main advantage of trading using opposite Air Busan and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Air Busan vs. Formetal Co | Air Busan vs. Industrial Bank | Air Busan vs. Sungmoon Electronics Co | Air Busan vs. Hyundai Industrial Co |
| Hana Materials vs. Dongkuk Structures Construction | Hana Materials vs. KCC Engineering Construction | Hana Materials vs. Dongwoo Farm To | Hana Materials vs. Woorim Machinery Co |
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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