Correlation Between KCC Engineering and Korea Electric
Can any of the company-specific risk be diversified away by investing in both KCC Engineering and Korea Electric 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 KCC Engineering and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCC Engineering Construction and Korea Electric Power, you can compare the effects of market volatilities on KCC Engineering and Korea Electric 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 KCC Engineering with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC Engineering and Korea Electric.
Diversification Opportunities for KCC Engineering and Korea Electric
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KCC and Korea is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KCC Engineering Construction and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power and KCC Engineering 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 KCC Engineering Construction are associated (or correlated) with Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of KCC Engineering i.e., KCC Engineering and Korea Electric go up and down completely randomly.
Pair Corralation between KCC Engineering and Korea Electric
Assuming the 90 days trading horizon KCC Engineering Construction is expected to under-perform the Korea Electric. But the stock apears to be less risky and, when comparing its historical volatility, KCC Engineering Construction is 1.81 times less risky than Korea Electric. The stock trades about -0.31 of its potential returns per unit of risk. The Korea Electric Power is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,956,000 in Korea Electric Power on November 3, 2024 and sell it today you would earn a total of 149,000 from holding Korea Electric Power or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCC Engineering Construction vs. Korea Electric Power
Performance |
| Timeline |
| KCC Engineering Cons |
| Korea Electric Power |
KCC Engineering and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCC Engineering and Korea Electric
The main advantage of trading using opposite KCC Engineering and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC Engineering position performs unexpectedly, Korea Electric 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 Korea Electric will offset losses from the drop in Korea Electric's long position.| KCC Engineering vs. Samsung Card Co | KCC Engineering vs. EBEST Investment Securities | KCC Engineering vs. Koh Young Technology | KCC Engineering vs. Hansol Chemica |
| Korea Electric vs. KT Submarine Telecom | Korea Electric vs. WONIK Materials CoLtd | Korea Electric vs. National Plastic Co | Korea Electric vs. Miwon Chemicals Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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