Correlation Between InnoTherapy and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both InnoTherapy 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 InnoTherapy and KEPCO Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InnoTherapy and KEPCO Engineering Construction, you can compare the effects of market volatilities on InnoTherapy 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 InnoTherapy with a short position of KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnoTherapy and KEPCO Engineering.
Diversification Opportunities for InnoTherapy and KEPCO Engineering
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between InnoTherapy and KEPCO is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding InnoTherapy and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering and InnoTherapy 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 InnoTherapy 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 InnoTherapy i.e., InnoTherapy and KEPCO Engineering go up and down completely randomly.
Pair Corralation between InnoTherapy and KEPCO Engineering
Assuming the 90 days trading horizon InnoTherapy is expected to generate 0.91 times more return on investment than KEPCO Engineering. However, InnoTherapy is 1.1 times less risky than KEPCO Engineering. It trades about 0.02 of its potential returns per unit of risk. KEPCO Engineering Construction is currently generating about 0.01 per unit of risk. If you would invest 870,000 in InnoTherapy on October 18, 2024 and sell it today you would earn a total of 42,000 from holding InnoTherapy or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InnoTherapy vs. KEPCO Engineering Construction
Performance |
| Timeline |
| InnoTherapy |
| KEPCO Engineering |
InnoTherapy and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InnoTherapy and KEPCO Engineering
The main advantage of trading using opposite InnoTherapy and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnoTherapy 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.| InnoTherapy vs. Sam Yang Foods | InnoTherapy vs. Eagle Veterinary Technology | InnoTherapy vs. Samsung Publishing Co | InnoTherapy vs. iNtRON Biotechnology |
| KEPCO Engineering vs. Lotte Data Communication | KEPCO Engineering vs. Air Busan Co | KEPCO Engineering vs. InnoTherapy | KEPCO Engineering vs. Jeju Air 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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