Correlation Between Asiana Airlines and Parksystems Corp

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

By analyzing existing cross correlation between Asiana Airlines and Parksystems Corp, you can compare the effects of market volatilities on Asiana Airlines and Parksystems Corp 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 Parksystems Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and Parksystems Corp.

Diversification Opportunities for Asiana Airlines and Parksystems Corp

-0.01

Correlation Coefficient

Asiana Airlines  Parksystems Corp

Good diversification

The 3 months correlation between Asiana and Parksystems is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and Parksystems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parksystems Corp 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 Parksystems Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parksystems Corp has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and Parksystems Corp go up and down completely randomly.

Pair Corralation between Asiana Airlines and Parksystems Corp

Assuming the 90 days trading horizon Asiana Airlines is expected to generate 2.61 times less return on investment than Parksystems Corp. But when comparing it to its historical volatility, Asiana Airlines is 1.94 times less risky than Parksystems Corp. It trades about 0.03 of its potential returns per unit of risk. Parksystems Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20,700,000  in Parksystems Corp on December 27, 2024 and sell it today you would earn a total of  850,000  from holding Parksystems Corp or generate 4.11% return on investment over 90 days.

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

Asiana Airlines  vs.  Parksystems Corp

Asiana Airlines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiana Airlines are ranked lower than 2 (%) 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.

Parksystems Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Parksystems Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Parksystems Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Asiana Airlines and Parksystems Corp

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

The idea behind Asiana Airlines and Parksystems Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.