Correlation Between KEPCO Engineering and KG Eco
Can any of the company-specific risk be diversified away by investing in both KEPCO Engineering and KG Eco 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 KG Eco 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 KG Eco Technology, you can compare the effects of market volatilities on KEPCO Engineering and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPCO Engineering and KG Eco.
Diversification Opportunities for KEPCO Engineering and KG Eco
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KEPCO and 151860 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding KEPCO Engineering Construction and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of KEPCO Engineering i.e., KEPCO Engineering and KG Eco go up and down completely randomly.
Pair Corralation between KEPCO Engineering and KG Eco
Assuming the 90 days trading horizon KEPCO Engineering Construction is expected to generate 0.75 times more return on investment than KG Eco. However, KEPCO Engineering Construction is 1.34 times less risky than KG Eco. It trades about 0.01 of its potential returns per unit of risk. KG Eco Technology is currently generating about -0.02 per unit of risk. If you would invest 6,316,831 in KEPCO Engineering Construction on October 13, 2024 and sell it today you would lose (426,831) from holding KEPCO Engineering Construction or give up 6.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
KEPCO Engineering Construction vs. KG Eco Technology
Performance |
| Timeline |
| KEPCO Engineering |
| KG Eco Technology |
KEPCO Engineering and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPCO Engineering and KG Eco
The main advantage of trading using opposite KEPCO Engineering and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPCO Engineering position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco'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 |
| KG Eco vs. ENERGYMACHINERY KOREA CoLtd | KG Eco vs. KEPCO Engineering Construction | KG Eco vs. Keyang Electric Machinery | KG Eco vs. Bosung Power Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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