Correlation Between Korea Electric and FLITTO
Can any of the company-specific risk be diversified away by investing in both Korea Electric and FLITTO 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 FLITTO 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 FLITTO Inc, you can compare the effects of market volatilities on Korea Electric and FLITTO 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 FLITTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and FLITTO.
Diversification Opportunities for Korea Electric and FLITTO
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and FLITTO is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and FLITTO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLITTO Inc 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 FLITTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLITTO Inc has no effect on the direction of Korea Electric i.e., Korea Electric and FLITTO go up and down completely randomly.
Pair Corralation between Korea Electric and FLITTO
Assuming the 90 days trading horizon Korea Electric is expected to generate 4.88 times less return on investment than FLITTO. But when comparing it to its historical volatility, Korea Electric Power is 2.69 times less risky than FLITTO. It trades about 0.01 of its potential returns per unit of risk. FLITTO Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,735,000 in FLITTO Inc on September 14, 2024 and sell it today you would lose (749,000) from holding FLITTO Inc or give up 27.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. FLITTO Inc
Performance |
| Timeline |
| Korea Electric Power |
| FLITTO Inc |
Korea Electric and FLITTO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and FLITTO
The main advantage of trading using opposite Korea Electric and FLITTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, FLITTO 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 FLITTO will offset losses from the drop in FLITTO's long position.| Korea Electric vs. Daou Data Corp | Korea Electric vs. Wonil Special Steel | Korea Electric vs. Ssangyong Information Communication | Korea Electric vs. Jeong Moon Information |
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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