Correlation Between Jin Air and Korea Investment
Can any of the company-specific risk be diversified away by investing in both Jin Air and Korea Investment 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 Jin Air and Korea Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and Korea Investment Holdings, you can compare the effects of market volatilities on Jin Air and Korea Investment 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 Jin Air with a short position of Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Korea Investment.
Diversification Opportunities for Jin Air and Korea Investment
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jin and Korea is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings and Jin Air 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 Jin Air Co are associated (or correlated) with Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of Jin Air i.e., Jin Air and Korea Investment go up and down completely randomly.
Pair Corralation between Jin Air and Korea Investment
Assuming the 90 days trading horizon Jin Air is expected to generate 9.22 times less return on investment than Korea Investment. In addition to that, Jin Air is 2.01 times more volatile than Korea Investment Holdings. It trades about 0.0 of its total potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.04 per unit of volatility. If you would invest 5,140,000 in Korea Investment Holdings on September 26, 2024 and sell it today you would earn a total of 150,000 from holding Korea Investment Holdings or generate 2.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Jin Air Co vs. Korea Investment Holdings
Performance |
Timeline |
Jin Air |
Korea Investment Holdings |
Jin Air and Korea Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jin Air and Korea Investment
The main advantage of trading using opposite Jin Air and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air position performs unexpectedly, Korea Investment 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 Investment will offset losses from the drop in Korea Investment's long position.The idea behind Jin Air Co and Korea Investment Holdings 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.Korea Investment vs. AptaBio Therapeutics | Korea Investment vs. Wonbang Tech Co | Korea Investment vs. Busan Industrial Co | Korea Investment vs. Busan Ind |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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