Correlation Between Consolidated Edison and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison 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 Consolidated Edison and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Korea Electric Power, you can compare the effects of market volatilities on Consolidated Edison 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 Consolidated Edison with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Korea Electric.
Diversification Opportunities for Consolidated Edison and Korea Electric
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consolidated and Korea is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison i.e., Consolidated Edison and Korea Electric go up and down completely randomly.
Pair Corralation between Consolidated Edison and Korea Electric
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 0.53 times more return on investment than Korea Electric. However, Consolidated Edison is 1.89 times less risky than Korea Electric. It trades about 0.01 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.0 per unit of risk. If you would invest 8,665 in Consolidated Edison on October 25, 2024 and sell it today you would earn a total of 411.00 from holding Consolidated Edison or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Korea Electric Power
Performance |
| Timeline |
| Consolidated Edison |
| Korea Electric Power |
Consolidated Edison and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Korea Electric
The main advantage of trading using opposite Consolidated Edison and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison 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.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| Korea Electric vs. Enel Chile SA | Korea Electric vs. Centrais Eltricas Brasileiras | Korea Electric vs. Central Puerto SA | Korea Electric vs. CMS Energy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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