Correlation Between Seah Steel and Asiana Airlines
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Asiana Airlines 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 Asiana Airlines 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 Asiana Airlines, you can compare the effects of market volatilities on Seah Steel and Asiana Airlines 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 Asiana Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Asiana Airlines.
Diversification Opportunities for Seah Steel and Asiana Airlines
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seah and Asiana is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Asiana Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiana Airlines 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 Asiana Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiana Airlines has no effect on the direction of Seah Steel i.e., Seah Steel and Asiana Airlines go up and down completely randomly.
Pair Corralation between Seah Steel and Asiana Airlines
Assuming the 90 days trading horizon Seah Steel is expected to generate 2.7 times less return on investment than Asiana Airlines. But when comparing it to its historical volatility, Seah Steel Corp is 1.03 times less risky than Asiana Airlines. It trades about 0.06 of its potential returns per unit of risk. Asiana Airlines is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 971,000 in Asiana Airlines on August 25, 2024 and sell it today you would earn a total of 70,000 from holding Asiana Airlines or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Seah Steel Corp vs. Asiana Airlines
Performance |
| Timeline |
| Seah Steel Corp |
| Asiana Airlines |
Seah Steel and Asiana Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Asiana Airlines
The main advantage of trading using opposite Seah Steel and Asiana Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Asiana Airlines 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 Asiana Airlines will offset losses from the drop in Asiana Airlines' 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 |
| Asiana Airlines vs. CJ Seafood Corp | Asiana Airlines vs. Ssangyong Information Communication | Asiana Airlines vs. Hankukpackage Co | Asiana Airlines vs. Organic Special Pet |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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