Correlation Between Shinsung Delta and Korea Air

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

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

Diversification Opportunities for Shinsung Delta and Korea Air

0.33

Correlation Coefficient

Shinsung Delta  Korea Air

Weak diversification

The 3 months correlation between Shinsung and Korea is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shinsung Delta Tech 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 Shinsung Delta 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 Shinsung Delta Tech 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 Shinsung Delta i.e., Shinsung Delta and Korea Air go up and down completely randomly.

Pair Corralation between Shinsung Delta and Korea Air

Assuming the 90 days trading horizon Shinsung Delta Tech is expected to generate 1.94 times more return on investment than Korea Air. However, Shinsung Delta is 1.94 times more volatile than Korea Air Svc. It trades about 0.16 of its potential returns per unit of risk. Korea Air Svc is currently generating about 0.08 per unit of risk. If you would invest  4,610,000  in Shinsung Delta Tech on September 3, 2024 and sell it today you would earn a total of  1,930,000  from holding Shinsung Delta Tech or generate 41.87% return on investment over 90 days.

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

Shinsung Delta Tech  vs.  Korea Air Svc

Shinsung Delta Tech

Risk-Adjusted Performance

12 of 100

Good

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

Korea Air Svc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Air Svc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shinsung Delta and Korea Air

The main advantage of trading using opposite Shinsung Delta and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsung Delta 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 Shinsung Delta Tech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.