Correlation Between Korean Air and Mobileleader CoLtd

Can any of the company-specific risk be diversified away by investing in both Korean Air and Mobileleader CoLtd 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 Korean Air and Mobileleader CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Korean Air Lines and Mobileleader CoLtd, you can compare the effects of market volatilities on Korean Air and Mobileleader CoLtd 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 Korean Air with a short position of Mobileleader CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and Mobileleader CoLtd.

Diversification Opportunities for Korean Air and Mobileleader CoLtd

-0.51

Correlation Coefficient

Korean Air  Mobileleader CoLtd

Excellent diversification

The 3 months correlation between Korean and Mobileleader is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and Mobileleader CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileleader CoLtd and Korean Air 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 Korean Air Lines are associated (or correlated) with Mobileleader CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileleader CoLtd has no effect on the direction of Korean Air i.e., Korean Air and Mobileleader CoLtd go up and down completely randomly.

Pair Corralation between Korean Air and Mobileleader CoLtd

Assuming the 90 days trading horizon Korean Air is expected to generate 3.4 times less return on investment than Mobileleader CoLtd. But when comparing it to its historical volatility, Korean Air Lines is 1.54 times less risky than Mobileleader CoLtd. It trades about 0.0 of its potential returns per unit of risk. Mobileleader CoLtd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,795,289  in Mobileleader CoLtd on October 11, 2024 and sell it today you would lose (120,289) from holding Mobileleader CoLtd or give up 6.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Korean Air Lines  vs.  Mobileleader CoLtd

Korean Air Lines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Korean Air Lines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korean Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mobileleader CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobileleader CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mobileleader CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Korean Air and Mobileleader CoLtd

The main advantage of trading using opposite Korean Air and Mobileleader CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Air position performs unexpectedly, Mobileleader CoLtd 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 Mobileleader CoLtd will offset losses from the drop in Mobileleader CoLtd's long position.

The idea behind Korean Air Lines and Mobileleader CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.