Correlation Between KEPCO Engineering and Naver
Can any of the company-specific risk be diversified away by investing in both KEPCO Engineering and Naver 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 Naver 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 Naver, you can compare the effects of market volatilities on KEPCO Engineering and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPCO Engineering and Naver.
Diversification Opportunities for KEPCO Engineering and Naver
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KEPCO and Naver is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding KEPCO Engineering Construction and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of KEPCO Engineering i.e., KEPCO Engineering and Naver go up and down completely randomly.
Pair Corralation between KEPCO Engineering and Naver
Assuming the 90 days trading horizon KEPCO Engineering Construction is expected to generate 1.06 times more return on investment than Naver. However, KEPCO Engineering is 1.06 times more volatile than Naver. It trades about 0.36 of its potential returns per unit of risk. Naver is currently generating about -0.09 per unit of risk. If you would invest 5,110,000 in KEPCO Engineering Construction on October 14, 2024 and sell it today you would earn a total of 780,000 from holding KEPCO Engineering Construction or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEPCO Engineering Construction vs. Naver
Performance |
| Timeline |
| KEPCO Engineering |
| Naver |
KEPCO Engineering and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPCO Engineering and Naver
The main advantage of trading using opposite KEPCO Engineering and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPCO Engineering position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| KEPCO Engineering vs. NH Investment Securities | KEPCO Engineering vs. Golden Bridge Investment | KEPCO Engineering vs. KTB Investment Securities | KEPCO Engineering vs. Jeju Semiconductor Corp |
| Naver vs. Keyang Electric Machinery | Naver vs. Hankook Furniture Co | Naver vs. ENERGYMACHINERY KOREA CoLtd | Naver vs. KEPCO Engineering Construction |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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