Correlation Between INFINITT Healthcare and Korea Air

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

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

Diversification Opportunities for INFINITT Healthcare and Korea Air

0.38

Correlation Coefficient

INFINITT Healthcare  Korea Air

Weak diversification

The 3 months correlation between INFINITT and Korea is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding INFINITT Healthcare 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 INFINITT Healthcare 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 INFINITT Healthcare 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 INFINITT Healthcare i.e., INFINITT Healthcare and Korea Air go up and down completely randomly.

Pair Corralation between INFINITT Healthcare and Korea Air

Assuming the 90 days trading horizon INFINITT Healthcare is expected to generate 11.89 times less return on investment than Korea Air. But when comparing it to its historical volatility, INFINITT Healthcare Co is 1.25 times less risky than Korea Air. It trades about 0.01 of its potential returns per unit of risk. Korea Air Svc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,090,000  in Korea Air Svc on September 14, 2024 and sell it today you would earn a total of  600,000  from holding Korea Air Svc or generate 11.79% return on investment over 90 days.

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

INFINITT Healthcare Co  vs.  Korea Air Svc

INFINITT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INFINITT Healthcare Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INFINITT Healthcare 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

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 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INFINITT Healthcare and Korea Air

The main advantage of trading using opposite INFINITT Healthcare and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFINITT Healthcare 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 INFINITT Healthcare 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.