Correlation Between Korea Electric and Dongil Steel
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Dongil Steel 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 Korea Electric and Dongil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electric Power and Dongil Steel Co, you can compare the effects of market volatilities on Korea Electric and Dongil Steel 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 Korea Electric with a short position of Dongil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Dongil Steel.
Diversification Opportunities for Korea Electric and Dongil Steel
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Dongil is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Dongil Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Steel and Korea Electric 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 Korea Electric Power are associated (or correlated) with Dongil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Steel has no effect on the direction of Korea Electric i.e., Korea Electric and Dongil Steel go up and down completely randomly.
Pair Corralation between Korea Electric and Dongil Steel
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 0.54 times more return on investment than Dongil Steel. However, Korea Electric Power is 1.87 times less risky than Dongil Steel. It trades about 0.22 of its potential returns per unit of risk. Dongil Steel Co is currently generating about 0.12 per unit of risk. If you would invest 2,105,000 in Korea Electric Power on November 27, 2024 and sell it today you would earn a total of 100,000 from holding Korea Electric Power or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Dongil Steel Co
Performance |
| Timeline |
| Korea Electric Power |
| Dongil Steel |
Korea Electric and Dongil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Dongil Steel
The main advantage of trading using opposite Korea Electric and Dongil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Dongil Steel 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 Dongil Steel will offset losses from the drop in Dongil Steel's long position.| Korea Electric vs. Lotte Non Life Insurance | Korea Electric vs. Seoyon Topmetal Co | Korea Electric vs. Samick Musical Instruments | Korea Electric vs. DB Insurance Co |
| Dongil Steel vs. Chorokbaem Healthcare Co | Dongil Steel vs. Cuckoo Homesys Co | Dongil Steel vs. LG Household Healthcare | Dongil Steel vs. Korea Information Communications |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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