Correlation Between Korea Electric and Pungguk Ethanol
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Pungguk Ethanol 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 Pungguk Ethanol 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 Pungguk Ethanol Industrial, you can compare the effects of market volatilities on Korea Electric and Pungguk Ethanol 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 Pungguk Ethanol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Pungguk Ethanol.
Diversification Opportunities for Korea Electric and Pungguk Ethanol
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Pungguk is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu 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 Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Korea Electric i.e., Korea Electric and Pungguk Ethanol go up and down completely randomly.
Pair Corralation between Korea Electric and Pungguk Ethanol
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 1.94 times more return on investment than Pungguk Ethanol. However, Korea Electric is 1.94 times more volatile than Pungguk Ethanol Industrial. It trades about 0.05 of its potential returns per unit of risk. Pungguk Ethanol Industrial is currently generating about -0.16 per unit of risk. If you would invest 2,255,000 in Korea Electric Power on August 28, 2024 and sell it today you would earn a total of 120,000 from holding Korea Electric Power or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Korea Electric Power vs. Pungguk Ethanol Industrial
Performance |
| Timeline |
| Korea Electric Power |
| Pungguk Ethanol Indu |
Korea Electric and Pungguk Ethanol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Pungguk Ethanol
The main advantage of trading using opposite Korea Electric and Pungguk Ethanol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Pungguk Ethanol 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 Pungguk Ethanol will offset losses from the drop in Pungguk Ethanol's long position.| Korea Electric vs. Top Material Co | Korea Electric vs. Hyundai Engineering Plastics | Korea Electric vs. INNOX Advanced Materials | Korea Electric vs. Samick Musical Instruments |
| Pungguk Ethanol vs. AptaBio Therapeutics | Pungguk Ethanol vs. Daewoo SBI SPAC | Pungguk Ethanol vs. Dream Security co | Pungguk Ethanol vs. Microfriend |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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