Correlation Between Korean Air and SAMG Entertainment

Can any of the company-specific risk be diversified away by investing in both Korean Air and SAMG Entertainment 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 SAMG Entertainment 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 SAMG Entertainment Co, you can compare the effects of market volatilities on Korean Air and SAMG Entertainment 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 SAMG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Air and SAMG Entertainment.

Diversification Opportunities for Korean Air and SAMG Entertainment

-0.6

Correlation Coefficient

Korean Air  SAMG Entertainment

Excellent diversification

The 3 months correlation between Korean and SAMG is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Korean Air Lines and SAMG Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMG Entertainment 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 SAMG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMG Entertainment has no effect on the direction of Korean Air i.e., Korean Air and SAMG Entertainment go up and down completely randomly.

Pair Corralation between Korean Air and SAMG Entertainment

Assuming the 90 days trading horizon Korean Air Lines is expected to under-perform the SAMG Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Korean Air Lines is 1.84 times less risky than SAMG Entertainment. The stock trades about -0.06 of its potential returns per unit of risk. The SAMG Entertainment Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,317,000  in SAMG Entertainment Co on September 22, 2024 and sell it today you would earn a total of  13,000  from holding SAMG Entertainment Co or generate 0.99% return on investment over 90 days.

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

Korean Air Lines  vs.  SAMG Entertainment Co

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 January 2025.

SAMG Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMG Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Korean Air and SAMG Entertainment

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

The idea behind Korean Air Lines and SAMG Entertainment Co 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.