Correlation Between Korea Electric and Amorepacific Corp
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Amorepacific Corp 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 Amorepacific Corp 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 Amorepacific Corp, you can compare the effects of market volatilities on Korea Electric and Amorepacific Corp 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 Amorepacific Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Amorepacific Corp.
Diversification Opportunities for Korea Electric and Amorepacific Corp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Amorepacific is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Amorepacific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amorepacific Corp 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 Amorepacific Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amorepacific Corp has no effect on the direction of Korea Electric i.e., Korea Electric and Amorepacific Corp go up and down completely randomly.
Pair Corralation between Korea Electric and Amorepacific Corp
Assuming the 90 days trading horizon Korea Electric is expected to generate 1.35 times less return on investment than Amorepacific Corp. But when comparing it to its historical volatility, Korea Electric Power is 1.65 times less risky than Amorepacific Corp. It trades about 0.03 of its potential returns per unit of risk. Amorepacific Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,620,000 in Amorepacific Corp on August 28, 2024 and sell it today you would earn a total of 1,220,000 from holding Amorepacific Corp or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Amorepacific Corp
Performance |
| Timeline |
| Korea Electric Power |
| Amorepacific Corp |
Korea Electric and Amorepacific Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Amorepacific Corp
The main advantage of trading using opposite Korea Electric and Amorepacific Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Amorepacific Corp 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 Amorepacific Corp will offset losses from the drop in Amorepacific Corp'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 |
| Amorepacific Corp vs. E Investment Development | Amorepacific Corp vs. Sangsangin Investment Securities | Amorepacific Corp vs. Dongwon Metal Co | Amorepacific Corp vs. Atinum Investment 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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