Correlation Between Seah Steel and Korea Air
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Korea Air 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 Seah Steel and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and Korea Air Svc, you can compare the effects of market volatilities on Seah Steel and Korea Air 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 Seah Steel with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Korea Air.
Diversification Opportunities for Seah Steel and Korea Air
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seah and Korea is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and Seah Steel 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 Seah Steel Corp are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Seah Steel i.e., Seah Steel and Korea Air go up and down completely randomly.
Pair Corralation between Seah Steel and Korea Air
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 0.98 times more return on investment than Korea Air. However, Seah Steel Corp is 1.02 times less risky than Korea Air. It trades about 0.06 of its potential returns per unit of risk. Korea Air Svc is currently generating about -0.16 per unit of risk. If you would invest 11,410,000 in Seah Steel Corp on August 25, 2024 and sell it today you would earn a total of 280,000 from holding Seah Steel Corp or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Korea Air Svc
Performance |
| Timeline |
| Seah Steel Corp |
| Korea Air Svc |
Seah Steel and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Korea Air
The main advantage of trading using opposite Seah Steel and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Korea Air 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 Air will offset losses from the drop in Korea Air's long position.| Seah Steel vs. GS Engineering Construction | Seah Steel vs. Camus Engineering Construction | Seah Steel vs. Alton Sports CoLtd | Seah Steel vs. Display Tech Co |
| Korea Air vs. Neungyule Education | Korea Air vs. Golden Bridge Investment | Korea Air vs. Nh Investment And | Korea Air vs. SBI Investment KOREA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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