Correlation Between Korea Electric and FarmStory
Can any of the company-specific risk be diversified away by investing in both Korea Electric and FarmStory 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 FarmStory 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 FarmStory Co, you can compare the effects of market volatilities on Korea Electric and FarmStory 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 FarmStory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and FarmStory.
Diversification Opportunities for Korea Electric and FarmStory
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and FarmStory is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and FarmStory Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarmStory 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 FarmStory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarmStory has no effect on the direction of Korea Electric i.e., Korea Electric and FarmStory go up and down completely randomly.
Pair Corralation between Korea Electric and FarmStory
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 1.24 times more return on investment than FarmStory. However, Korea Electric is 1.24 times more volatile than FarmStory Co. It trades about 0.07 of its potential returns per unit of risk. FarmStory Co is currently generating about -0.05 per unit of risk. If you would invest 1,750,000 in Korea Electric Power on August 29, 2024 and sell it today you would earn a total of 690,000 from holding Korea Electric Power or generate 39.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. FarmStory Co
Performance |
| Timeline |
| Korea Electric Power |
| FarmStory |
Korea Electric and FarmStory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and FarmStory
The main advantage of trading using opposite Korea Electric and FarmStory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, FarmStory 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 FarmStory will offset losses from the drop in FarmStory's long position.| Korea Electric vs. Samick Musical Instruments | Korea Electric vs. Next Entertainment World | Korea Electric vs. Hansol Homedeco Co | Korea Electric vs. MEDIANA CoLtd |
| FarmStory vs. Samsung Electronics Co | FarmStory vs. Samsung Electronics Co | FarmStory vs. Hyundai Motor Co | FarmStory vs. Hyundai Motor |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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