Correlation Between Haesung Industrial and Asiana Airlines

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

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

Diversification Opportunities for Haesung Industrial and Asiana Airlines

0.63

Correlation Coefficient

Haesung Industrial  Asiana Airlines

Poor diversification

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

Pair Corralation between Haesung Industrial and Asiana Airlines

Assuming the 90 days trading horizon Haesung Industrial Co is expected to generate 0.95 times more return on investment than Asiana Airlines. However, Haesung Industrial Co is 1.05 times less risky than Asiana Airlines. It trades about 0.06 of its potential returns per unit of risk. Asiana Airlines is currently generating about 0.02 per unit of risk. 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

Haesung Industrial Co  vs.  Asiana Airlines

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.

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.

Pair Trading with Haesung Industrial and Asiana Airlines

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

The idea behind Haesung Industrial Co and Asiana Airlines 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.