Correlation Between KEPCO Engineering and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both KEPCO Engineering and Moonbae Steel 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 KEPCO Engineering and Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEPCO Engineering Construction and Moonbae Steel, you can compare the effects of market volatilities on KEPCO Engineering and Moonbae Steel 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 KEPCO Engineering with a short position of Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPCO Engineering and Moonbae Steel.
Diversification Opportunities for KEPCO Engineering and Moonbae Steel
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KEPCO and Moonbae is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KEPCO Engineering Construction and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and KEPCO 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 KEPCO Engineering Construction are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of KEPCO Engineering i.e., KEPCO Engineering and Moonbae Steel go up and down completely randomly.
Pair Corralation between KEPCO Engineering and Moonbae Steel
Assuming the 90 days trading horizon KEPCO Engineering Construction is expected to under-perform the Moonbae Steel. In addition to that, KEPCO Engineering is 1.07 times more volatile than Moonbae Steel. It trades about -0.31 of its total potential returns per unit of risk. Moonbae Steel is currently generating about 0.02 per unit of volatility. If you would invest 226,500 in Moonbae Steel on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Moonbae Steel or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEPCO Engineering Construction vs. Moonbae Steel
Performance |
| Timeline |
| KEPCO Engineering |
| Moonbae Steel |
KEPCO Engineering and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPCO Engineering and Moonbae Steel
The main advantage of trading using opposite KEPCO Engineering and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPCO Engineering position performs unexpectedly, Moonbae Steel 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Camus Engineering Construction | KEPCO Engineering vs. Solution Advanced Technology | KEPCO Engineering vs. Busan Industrial Co |
| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. POSCO Holdings | Moonbae Steel vs. Hanwha Solutions | Moonbae Steel vs. Lotte Chemical Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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