Correlation Between SEOJEON ELECTRIC and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC and KEPCO Engineering 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 KEPCO Engineering 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 KEPCO Engineering Construction, you can compare the effects of market volatilities on SEOJEON ELECTRIC and KEPCO Engineering 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 KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and KEPCO Engineering.
Diversification Opportunities for SEOJEON ELECTRIC and KEPCO Engineering
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SEOJEON and KEPCO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering 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 KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and KEPCO Engineering go up and down completely randomly.
Pair Corralation between SEOJEON ELECTRIC and KEPCO Engineering
Assuming the 90 days trading horizon SEOJEON ELECTRIC MACHINERY is expected to generate 1.05 times more return on investment than KEPCO Engineering. However, SEOJEON ELECTRIC is 1.05 times more volatile than KEPCO Engineering Construction. It trades about -0.17 of its potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.27 per unit of risk. If you would invest 458,500 in SEOJEON ELECTRIC MACHINERY on September 14, 2024 and sell it today you would lose (78,500) from holding SEOJEON ELECTRIC MACHINERY or give up 17.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEOJEON ELECTRIC MACHINERY vs. KEPCO Engineering Construction
Performance |
| Timeline |
| SEOJEON ELECTRIC MAC |
| KEPCO Engineering |
SEOJEON ELECTRIC and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEOJEON ELECTRIC and KEPCO Engineering
The main advantage of trading using opposite SEOJEON ELECTRIC and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| SEOJEON ELECTRIC vs. Ecoplastic | SEOJEON ELECTRIC vs. Sewoon Medical Co | SEOJEON ELECTRIC vs. PI Advanced Materials | SEOJEON ELECTRIC vs. INNOX Advanced Materials |
| KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Camus Engineering Construction | KEPCO Engineering vs. Solution Advanced Technology | KEPCO Engineering vs. Busan Industrial Co |
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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