Correlation Between SKONEC Entertainment and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both SKONEC Entertainment 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 SKONEC Entertainment and KEPCO Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SKONEC Entertainment Co and KEPCO Engineering Construction, you can compare the effects of market volatilities on SKONEC Entertainment 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 SKONEC Entertainment with a short position of KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SKONEC Entertainment and KEPCO Engineering.
Diversification Opportunities for SKONEC Entertainment and KEPCO Engineering
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SKONEC and KEPCO is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SKONEC Entertainment Co and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering and SKONEC Entertainment 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 SKONEC Entertainment Co 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 SKONEC Entertainment i.e., SKONEC Entertainment and KEPCO Engineering go up and down completely randomly.
Pair Corralation between SKONEC Entertainment and KEPCO Engineering
Assuming the 90 days trading horizon SKONEC Entertainment Co is expected to under-perform the KEPCO Engineering. In addition to that, SKONEC Entertainment is 3.34 times more volatile than KEPCO Engineering Construction. It trades about -0.07 of its total potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.01 per unit of volatility. If you would invest 6,890,000 in KEPCO Engineering Construction on November 27, 2024 and sell it today you would lose (50,000) from holding KEPCO Engineering Construction or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SKONEC Entertainment Co vs. KEPCO Engineering Construction
Performance |
| Timeline |
| SKONEC Entertainment |
| KEPCO Engineering |
SKONEC Entertainment and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SKONEC Entertainment and KEPCO Engineering
The main advantage of trading using opposite SKONEC Entertainment and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SKONEC Entertainment 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.| SKONEC Entertainment vs. LB Investment | SKONEC Entertainment vs. Korea Investment Holdings | SKONEC Entertainment vs. Samick Musical Instruments | SKONEC Entertainment vs. Coloray International Investment |
| KEPCO Engineering vs. Jb Financial | KEPCO Engineering vs. Samsung Life Insurance | KEPCO Engineering vs. Digital Imaging Technology | KEPCO Engineering vs. Silicon2 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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