Correlation Between Korea Electric and CJ Cheiljedang
Can any of the company-specific risk be diversified away by investing in both Korea Electric and CJ Cheiljedang 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 CJ Cheiljedang 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 CJ Cheiljedang, you can compare the effects of market volatilities on Korea Electric and CJ Cheiljedang 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 CJ Cheiljedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and CJ Cheiljedang.
Diversification Opportunities for Korea Electric and CJ Cheiljedang
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and 097950 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang 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 CJ Cheiljedang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Cheiljedang has no effect on the direction of Korea Electric i.e., Korea Electric and CJ Cheiljedang go up and down completely randomly.
Pair Corralation between Korea Electric and CJ Cheiljedang
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 0.78 times more return on investment than CJ Cheiljedang. However, Korea Electric Power is 1.28 times less risky than CJ Cheiljedang. It trades about 0.14 of its potential returns per unit of risk. CJ Cheiljedang is currently generating about 0.02 per unit of risk. If you would invest 2,295,000 in Korea Electric Power on August 31, 2024 and sell it today you would earn a total of 130,000 from holding Korea Electric Power or generate 5.66% 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. CJ Cheiljedang
Performance |
| Timeline |
| Korea Electric Power |
| CJ Cheiljedang |
Korea Electric and CJ Cheiljedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and CJ Cheiljedang
The main advantage of trading using opposite Korea Electric and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, CJ Cheiljedang 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 CJ Cheiljedang will offset losses from the drop in CJ Cheiljedang's long position.| Korea Electric vs. Busan Industrial Co | Korea Electric vs. Busan Ind | Korea Electric vs. Mirae Asset Daewoo | Korea Electric vs. Finebesteel |
| CJ Cheiljedang vs. Taeyang Metal Industrial | CJ Cheiljedang vs. Heungkuk Metaltech CoLtd | CJ Cheiljedang vs. Dongwon Metal Co | CJ Cheiljedang vs. Handok Clean Tech |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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