Correlation Between Asiana Airlines and Haesung Industrial

Can any of the company-specific risk be diversified away by investing in both Asiana Airlines and Haesung Industrial 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 Asiana Airlines and Haesung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asiana Airlines and Haesung Industrial Co, you can compare the effects of market volatilities on Asiana Airlines and Haesung Industrial 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 Asiana Airlines with a short position of Haesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and Haesung Industrial.

Diversification Opportunities for Asiana Airlines and Haesung Industrial

0.63

Correlation Coefficient

Asiana Airlines  Haesung Industrial

Poor diversification

The 3 months correlation between Asiana and Haesung is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and Haesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haesung Industrial and Asiana Airlines 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 Asiana Airlines are associated (or correlated) with Haesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haesung Industrial has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and Haesung Industrial go up and down completely randomly.

Pair Corralation between Asiana Airlines and Haesung Industrial

Assuming the 90 days trading horizon Asiana Airlines is expected to generate 2.71 times less return on investment than Haesung Industrial. In addition to that, Asiana Airlines is 1.05 times more volatile than Haesung Industrial Co. It trades about 0.02 of its total potential returns per unit of risk. Haesung Industrial Co is currently generating about 0.06 per unit of volatility. If you would invest  593,000  in Haesung Industrial Co on November 29, 2024 and sell it today you would earn a total of  29,000  from holding Haesung Industrial Co or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Asiana Airlines  vs.  Haesung Industrial Co

Asiana Airlines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiana Airlines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Asiana Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Haesung Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haesung Industrial Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Haesung Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asiana Airlines and Haesung Industrial

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

The idea behind Asiana Airlines and Haesung Industrial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.