Correlation Between Korea Electric and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Sempio Foods 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 Sempio Foods 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 Sempio Foods Co, you can compare the effects of market volatilities on Korea Electric and Sempio Foods 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 Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Sempio Foods.
Diversification Opportunities for Korea Electric and Sempio Foods
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Sempio is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods 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 Sempio Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempio Foods has no effect on the direction of Korea Electric i.e., Korea Electric and Sempio Foods go up and down completely randomly.
Pair Corralation between Korea Electric and Sempio Foods
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 1.0 times more return on investment than Sempio Foods. However, Korea Electric Power is 1.0 times less risky than Sempio Foods. It trades about 0.08 of its potential returns per unit of risk. Sempio Foods Co is currently generating about -0.2 per unit of risk. If you would invest 2,305,000 in Korea Electric Power on August 25, 2024 and sell it today you would earn a total of 70,000 from holding Korea Electric Power or generate 3.04% 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. Sempio Foods Co
Performance |
| Timeline |
| Korea Electric Power |
| Sempio Foods |
Korea Electric and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Sempio Foods
The main advantage of trading using opposite Korea Electric and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Sempio Foods 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 Sempio Foods will offset losses from the drop in Sempio Foods' long position.| Korea Electric vs. ENERGYMACHINERY KOREA CoLtd | Korea Electric vs. GS Engineering Construction | Korea Electric vs. SEOJEON ELECTRIC MACHINERY | Korea Electric vs. Green Cross Medical |
| Sempio Foods vs. Tway Air Co | Sempio Foods vs. DB Insurance Co | Sempio Foods vs. Daejung Chemicals Metals | Sempio Foods vs. Ssangyong Materials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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