Correlation Between Solution Advanced and Korean Air
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Korean 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 Solution Advanced and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Korean Air Lines, you can compare the effects of market volatilities on Solution Advanced and Korean 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 Solution Advanced with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Korean Air.
Diversification Opportunities for Solution Advanced and Korean Air
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solution and Korean is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Korean Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Air Lines and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Korean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Air Lines has no effect on the direction of Solution Advanced i.e., Solution Advanced and Korean Air go up and down completely randomly.
Pair Corralation between Solution Advanced and Korean Air
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 2.55 times more return on investment than Korean Air. However, Solution Advanced is 2.55 times more volatile than Korean Air Lines. It trades about 0.09 of its potential returns per unit of risk. Korean Air Lines is currently generating about -0.09 per unit of risk. If you would invest 136,900 in Solution Advanced Technology on September 12, 2024 and sell it today you would earn a total of 7,900 from holding Solution Advanced Technology or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Korean Air Lines
Performance |
| Timeline |
| Solution Advanced |
| Korean Air Lines |
Solution Advanced and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Korean Air
The main advantage of trading using opposite Solution Advanced and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Korean 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 Korean Air will offset losses from the drop in Korean Air's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Korean Air vs. Jin Air Co | Korean Air vs. Air Busan Co | Korean Air vs. Tway Air Co | Korean Air vs. Solution Advanced Technology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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