Correlation Between Kisan Telecom and Korea Air

Can any of the company-specific risk be diversified away by investing in both Kisan Telecom and Korea Air 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 Kisan Telecom and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kisan Telecom Co and Korea Air Svc, you can compare the effects of market volatilities on Kisan Telecom and Korea Air 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 Kisan Telecom with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kisan Telecom and Korea Air.

Diversification Opportunities for Kisan Telecom and Korea Air

0.23

Correlation Coefficient

Kisan Telecom  Korea Air

Modest diversification

The 3 months correlation between Kisan and Korea is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kisan Telecom Co and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and Kisan Telecom 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 Kisan Telecom Co are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Kisan Telecom i.e., Kisan Telecom and Korea Air go up and down completely randomly.

Pair Corralation between Kisan Telecom and Korea Air

Assuming the 90 days trading horizon Kisan Telecom Co is expected to under-perform the Korea Air. But the stock apears to be less risky and, when comparing its historical volatility, Kisan Telecom Co is 1.25 times less risky than Korea Air. The stock trades about -0.02 of its potential returns per unit of risk. The Korea Air Svc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,950,000  in Korea Air Svc on September 4, 2024 and sell it today you would earn a total of  1,120,000  from holding Korea Air Svc or generate 22.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kisan Telecom Co  vs.  Korea Air Svc

Kisan Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kisan Telecom Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kisan Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Air Svc

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Air Svc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kisan Telecom and Korea Air

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

The idea behind Kisan Telecom Co and Korea Air Svc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.