Correlation Between SEOJEON ELECTRIC and Korea Electric
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC 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 SEOJEON ELECTRIC and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEOJEON ELECTRIC MACHINERY and Korea Electric Power, you can compare the effects of market volatilities on SEOJEON ELECTRIC 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 SEOJEON ELECTRIC with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and Korea Electric.
Diversification Opportunities for SEOJEON ELECTRIC and Korea Electric
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEOJEON and Korea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY 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 SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and Korea Electric go up and down completely randomly.
Pair Corralation between SEOJEON ELECTRIC and Korea Electric
Assuming the 90 days trading horizon SEOJEON ELECTRIC is expected to generate 2.46 times less return on investment than Korea Electric. In addition to that, SEOJEON ELECTRIC is 1.86 times more volatile than Korea Electric Power. It trades about 0.02 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.09 per unit of volatility. If you would invest 2,225,000 in Korea Electric Power on August 29, 2024 and sell it today you would earn a total of 215,000 from holding Korea Electric Power or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEOJEON ELECTRIC MACHINERY vs. Korea Electric Power
Performance |
| Timeline |
| SEOJEON ELECTRIC MAC |
| Korea Electric Power |
SEOJEON ELECTRIC and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEOJEON ELECTRIC and Korea Electric
The main advantage of trading using opposite SEOJEON ELECTRIC and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC 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.| SEOJEON ELECTRIC vs. Samsung Electronics Co | SEOJEON ELECTRIC vs. Samsung Electronics Co | SEOJEON ELECTRIC vs. KB Financial Group | SEOJEON ELECTRIC vs. Shinhan Financial Group |
| Korea Electric vs. Samick Musical Instruments | Korea Electric vs. Next Entertainment World | Korea Electric vs. Hansol Homedeco Co | Korea Electric vs. MEDIANA CoLtd |
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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