Correlation Between Korea Air and NH Investment
Can any of the company-specific risk be diversified away by investing in both Korea Air and NH Investment 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 Korea Air and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Air Svc and NH Investment Securities, you can compare the effects of market volatilities on Korea Air and NH Investment 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 Korea Air with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Air and NH Investment.
Diversification Opportunities for Korea Air and NH Investment
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and 005940 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Korea 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 Korea Air Svc are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Korea Air i.e., Korea Air and NH Investment go up and down completely randomly.
Pair Corralation between Korea Air and NH Investment
Assuming the 90 days trading horizon Korea Air Svc is expected to generate 1.86 times more return on investment than NH Investment. However, Korea Air is 1.86 times more volatile than NH Investment Securities. It trades about 0.08 of its potential returns per unit of risk. NH Investment Securities is currently generating about 0.06 per unit of risk. If you would invest 5,580,000 in Korea Air Svc on September 24, 2024 and sell it today you would earn a total of 280,000 from holding Korea Air Svc or generate 5.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Korea Air Svc vs. NH Investment Securities
Performance |
Timeline |
Korea Air Svc |
NH Investment Securities |
Korea Air and NH Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Air and NH Investment
The main advantage of trading using opposite Korea Air and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Air position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.Korea Air vs. Busan Industrial Co | Korea Air vs. Busan Ind | Korea Air vs. Mirae Asset Daewoo | Korea Air vs. Shinhan WTI Futures |
NH Investment vs. Korea Air Svc | NH Investment vs. Samsung Publishing Co | NH Investment vs. Iljin Display | NH Investment vs. Jin Air 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |