Correlation Between Korea Information and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both Korea Information 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 Korea Information and KEPCO Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and KEPCO Engineering Construction, you can compare the effects of market volatilities on Korea Information 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 Korea Information with a short position of KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and KEPCO Engineering.
Diversification Opportunities for Korea Information and KEPCO Engineering
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and KEPCO is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering and Korea Information 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 Information Engineering 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 Korea Information i.e., Korea Information and KEPCO Engineering go up and down completely randomly.
Pair Corralation between Korea Information and KEPCO Engineering
Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the KEPCO Engineering. In addition to that, Korea Information is 1.29 times more volatile than KEPCO Engineering Construction. It trades about -0.02 of its total potential returns per unit of risk. KEPCO Engineering Construction is currently generating about 0.49 per unit of volatility. If you would invest 5,680,000 in KEPCO Engineering Construction on October 24, 2024 and sell it today you would earn a total of 1,020,000 from holding KEPCO Engineering Construction or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. KEPCO Engineering Construction
Performance |
| Timeline |
| Korea Information |
| KEPCO Engineering |
Korea Information and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and KEPCO Engineering
The main advantage of trading using opposite Korea Information and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information 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.| Korea Information vs. Daishin Balance No8 | Korea Information vs. NAU IB Capital | Korea Information vs. Daishin Balance No | Korea Information vs. Daesung Private Equity |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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