Correlation Between Songwon Industrial and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Korea Electric 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 Songwon Industrial and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Korea Electric Power, you can compare the effects of market volatilities on Songwon Industrial and Korea Electric 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 Songwon Industrial with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Korea Electric.
Diversification Opportunities for Songwon Industrial and Korea Electric
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Songwon and Korea is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power and Songwon 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 Songwon Industrial Co are associated (or correlated) with Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Korea Electric go up and down completely randomly.
Pair Corralation between Songwon Industrial and Korea Electric
Assuming the 90 days trading horizon Songwon Industrial Co is expected to under-perform the Korea Electric. In addition to that, Songwon Industrial is 1.14 times more volatile than Korea Electric Power. It trades about -0.03 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.01 per unit of volatility. If you would invest 2,085,000 in Korea Electric Power on November 3, 2024 and sell it today you would earn a total of 20,000 from holding Korea Electric Power or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Korea Electric Power
Performance |
| Timeline |
| Songwon Industrial |
| Korea Electric Power |
Songwon Industrial and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Korea Electric
The main advantage of trading using opposite Songwon Industrial and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Korea Electric 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 Electric will offset losses from the drop in Korea Electric's long position.| Songwon Industrial vs. LEENO Industrial | Songwon Industrial vs. Seoyon Topmetal Co | Songwon Industrial vs. Seoul Food Industrial | Songwon Industrial vs. Hanjoo Light Metal |
| Korea Electric vs. KT Submarine Telecom | Korea Electric vs. WONIK Materials CoLtd | Korea Electric vs. National Plastic Co | Korea Electric vs. Miwon Chemicals Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges |