Correlation Between Genie Energy and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Genie Energy 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 Genie Energy and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Energy and Korea Electric Power, you can compare the effects of market volatilities on Genie Energy 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 Genie Energy with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Energy and Korea Electric.
Diversification Opportunities for Genie Energy and Korea Electric
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Genie and Korea is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy 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 Genie Energy 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 Genie Energy 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 Genie Energy i.e., Genie Energy and Korea Electric go up and down completely randomly.
Pair Corralation between Genie Energy and Korea Electric
Considering the 90-day investment horizon Genie Energy is expected to generate 1.36 times more return on investment than Korea Electric. However, Genie Energy is 1.36 times more volatile than Korea Electric Power. It trades about 0.05 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.02 per unit of risk. If you would invest 992.00 in Genie Energy on August 24, 2024 and sell it today you would earn a total of 598.00 from holding Genie Energy or generate 60.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Energy vs. Korea Electric Power
Performance |
| Timeline |
| Genie Energy |
| Korea Electric Power |
Genie Energy and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Energy and Korea Electric
The main advantage of trading using opposite Genie Energy and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Energy 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.| Genie Energy vs. Centrais Electricas Brasileiras | Genie Energy vs. Central Puerto SA | Genie Energy vs. Korea Electric Power | Genie Energy vs. Empresa Distribuidora y |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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