Correlation Between HLB Power and Korea Electric
Can any of the company-specific risk be diversified away by investing in both HLB Power 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 HLB Power and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HLB Power Co and Korea Electric Power, you can compare the effects of market volatilities on HLB Power 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 HLB Power with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of HLB Power and Korea Electric.
Diversification Opportunities for HLB Power and Korea Electric
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HLB and Korea is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding HLB Power Co 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 HLB Power 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 HLB Power Co 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 HLB Power i.e., HLB Power and Korea Electric go up and down completely randomly.
Pair Corralation between HLB Power and Korea Electric
Assuming the 90 days trading horizon HLB Power Co is expected to under-perform the Korea Electric. In addition to that, HLB Power is 1.93 times more volatile than Korea Electric Power. It trades about -0.03 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.01 per unit of volatility. If you would invest 2,175,000 in Korea Electric Power on September 12, 2024 and sell it today you would lose (35,000) from holding Korea Electric Power or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HLB Power Co vs. Korea Electric Power
Performance |
| Timeline |
| HLB Power |
| Korea Electric Power |
HLB Power and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HLB Power and Korea Electric
The main advantage of trading using opposite HLB Power and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HLB Power 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.| HLB Power vs. Cloud Air CoLtd | HLB Power vs. Jin Air Co | HLB Power vs. Daejung Chemicals Metals | HLB Power vs. iNtRON Biotechnology |
| Korea Electric vs. Samsung Electronics Co | Korea Electric vs. Samsung Electronics Co | Korea Electric vs. Naver | Korea Electric vs. SK Hynix |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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