Correlation Between Korea Electric and SOOSAN INT
Can any of the company-specific risk be diversified away by investing in both Korea Electric and SOOSAN INT 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 SOOSAN INT 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 SOOSAN INT Co, you can compare the effects of market volatilities on Korea Electric and SOOSAN INT 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 SOOSAN INT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and SOOSAN INT.
Diversification Opportunities for Korea Electric and SOOSAN INT
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and SOOSAN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and SOOSAN INT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOOSAN INT 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 SOOSAN INT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOOSAN INT has no effect on the direction of Korea Electric i.e., Korea Electric and SOOSAN INT go up and down completely randomly.
Pair Corralation between Korea Electric and SOOSAN INT
Assuming the 90 days trading horizon Korea Electric is expected to generate 11.37 times less return on investment than SOOSAN INT. But when comparing it to its historical volatility, Korea Electric Power is 1.83 times less risky than SOOSAN INT. It trades about 0.01 of its potential returns per unit of risk. SOOSAN INT Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,142,518 in SOOSAN INT Co on September 12, 2024 and sell it today you would earn a total of 917,482 from holding SOOSAN INT Co or generate 80.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. SOOSAN INT Co
Performance |
| Timeline |
| Korea Electric Power |
| SOOSAN INT |
Korea Electric and SOOSAN INT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and SOOSAN INT
The main advantage of trading using opposite Korea Electric and SOOSAN INT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, SOOSAN INT 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 SOOSAN INT will offset losses from the drop in SOOSAN INT's long position.| Korea Electric vs. Samsung Electronics Co | Korea Electric vs. Samsung Electronics Co | Korea Electric vs. Naver | Korea Electric vs. SK Hynix |
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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 Stocks Directory module to find actively traded stocks across global markets.
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