Correlation Between J Steel and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both J Steel and KEPCO Engineering 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 J Steel and KEPCO Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Steel Co and KEPCO Engineering Construction, you can compare the effects of market volatilities on J Steel and KEPCO Engineering 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 J Steel with a short position of KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and KEPCO Engineering.
Diversification Opportunities for J Steel and KEPCO Engineering
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between 023440 and KEPCO is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering and J Steel 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 J Steel Co are associated (or correlated) with KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of J Steel i.e., J Steel and KEPCO Engineering go up and down completely randomly.
Pair Corralation between J Steel and KEPCO Engineering
Assuming the 90 days trading horizon J Steel Co is expected to generate 1.44 times more return on investment than KEPCO Engineering. However, J Steel is 1.44 times more volatile than KEPCO Engineering Construction. It trades about -0.1 of its potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.31 per unit of risk. If you would invest 204,000 in J Steel Co on September 12, 2024 and sell it today you would lose (32,100) from holding J Steel Co or give up 15.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Steel Co vs. KEPCO Engineering Construction
Performance |
| Timeline |
| J Steel |
| KEPCO Engineering |
J Steel and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Steel and KEPCO Engineering
The main advantage of trading using opposite J Steel and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel vs. SK Hynix |
| KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Camus Engineering Construction | KEPCO Engineering vs. Solution Advanced Technology | KEPCO Engineering vs. Busan Industrial 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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