Correlation Between Korea Electric and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Lindeman Asia 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 Lindeman Asia 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 Lindeman Asia Investment, you can compare the effects of market volatilities on Korea Electric and Lindeman Asia 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 Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Lindeman Asia.
Diversification Opportunities for Korea Electric and Lindeman Asia
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Lindeman is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment 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 Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of Korea Electric i.e., Korea Electric and Lindeman Asia go up and down completely randomly.
Pair Corralation between Korea Electric and Lindeman Asia
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 0.5 times more return on investment than Lindeman Asia. However, Korea Electric Power is 1.99 times less risky than Lindeman Asia. It trades about 0.01 of its potential returns per unit of risk. Lindeman Asia Investment is currently generating about -0.02 per unit of risk. If you would invest 2,085,000 in Korea Electric Power on November 3, 2024 and sell it today you would earn a total of 20,000 from holding Korea Electric Power or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Lindeman Asia Investment
Performance |
| Timeline |
| Korea Electric Power |
| Lindeman Asia Investment |
Korea Electric and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Lindeman Asia
The main advantage of trading using opposite Korea Electric and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| Korea Electric vs. PJ Metal Co | Korea Electric vs. Daejung Chemicals Metals | Korea Electric vs. BGF Retail Co | Korea Electric vs. Iljin Display |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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