Correlation Between Korea Electric and Daishin Balance
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Daishin Balance 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 Daishin Balance 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 Daishin Balance 1, you can compare the effects of market volatilities on Korea Electric and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Daishin Balance.
Diversification Opportunities for Korea Electric and Daishin Balance
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Daishin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Daishin Balance 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance 1 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance 1 has no effect on the direction of Korea Electric i.e., Korea Electric and Daishin Balance go up and down completely randomly.
Pair Corralation between Korea Electric and Daishin Balance
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 0.63 times more return on investment than Daishin Balance. However, Korea Electric Power is 1.59 times less risky than Daishin Balance. It trades about 0.09 of its potential returns per unit of risk. Daishin Balance 1 is currently generating about -0.01 per unit of risk. If you would invest 2,000,000 in Korea Electric Power on September 2, 2024 and sell it today you would earn a total of 390,000 from holding Korea Electric Power or generate 19.5% 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. Daishin Balance 1
Performance |
| Timeline |
| Korea Electric Power |
| Daishin Balance 1 |
Korea Electric and Daishin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Daishin Balance
The main advantage of trading using opposite Korea Electric and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Daishin Balance 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 Daishin Balance will offset losses from the drop in Daishin Balance's long position.| Korea Electric vs. Sunny Electronics Corp | Korea Electric vs. Daejoo Electronic Materials | Korea Electric vs. Coloray International Investment | Korea Electric vs. CU Medical Systems |
| Daishin Balance vs. Pan Entertainment Co | Daishin Balance vs. Korea Air Svc | Daishin Balance vs. Air Busan Co | Daishin Balance vs. Mgame Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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