Correlation Between Visa and Korean Air
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Korean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Korean Air Lines, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Korean Air.
Diversification Opportunities for Visa and Korean Air
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Korean is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Korean Air go up and down completely randomly.
Pair Corralation between Visa and Korean Air
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.23 times more return on investment than Korean Air. However, Visa is 1.23 times more volatile than Korean Air Lines. It trades about 0.12 of its potential returns per unit of risk. Korean Air Lines is currently generating about -0.01 per unit of risk. If you would invest 27,135 in Visa Class A on November 1, 2024 and sell it today you would earn a total of 6,453 from holding Visa Class A or generate 23.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.95% |
| Values | Daily Returns |
Visa Class A vs. Korean Air Lines
Performance |
| Timeline |
| Visa Class A |
| Korean Air Lines |
Visa and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Korean Air
The main advantage of trading using opposite Visa and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Korean Air vs. Jin Air Co | Korean Air vs. Air Busan Co | Korean Air vs. Tway Air Co | Korean Air vs. Busan Industrial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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