Correlation Between Korea Air and Sangsin Energy

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

Diversification Opportunities for Korea Air and Sangsin Energy

-0.05

Correlation Coefficient

Korea Air  Sangsin Energy

Good diversification

The 3 months correlation between Korea and Sangsin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Korea Air Svc and Sangsin Energy Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsin Energy Display 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 Sangsin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsin Energy Display has no effect on the direction of Korea Air i.e., Korea Air and Sangsin Energy go up and down completely randomly.

Pair Corralation between Korea Air and Sangsin Energy

Assuming the 90 days trading horizon Korea Air Svc is expected to under-perform the Sangsin Energy. But the stock apears to be less risky and, when comparing its historical volatility, Korea Air Svc is 1.53 times less risky than Sangsin Energy. The stock trades about -0.1 of its potential returns per unit of risk. The Sangsin Energy Display is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  740,952  in Sangsin Energy Display on December 1, 2024 and sell it today you would earn a total of  75,048  from holding Sangsin Energy Display or generate 10.13% return on investment over 90 days.

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

Korea Air Svc  vs.  Sangsin Energy Display

Korea Air Svc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea Air Svc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sangsin Energy Display

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sangsin Energy Display are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sangsin Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Korea Air and Sangsin Energy

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

The idea behind Korea Air Svc and Sangsin Energy Display 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.