Correlation Between Korea Electric and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Centrais Electricas 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 Korea Electric and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electric Power and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Korea Electric and Centrais Electricas 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 Korea Electric with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Centrais Electricas.
Diversification Opportunities for Korea Electric and Centrais Electricas
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Centrais is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and Korea 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 Korea Electric Power are associated (or correlated) with Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of Korea Electric i.e., Korea Electric and Centrais Electricas go up and down completely randomly.
Pair Corralation between Korea Electric and Centrais Electricas
Considering the 90-day investment horizon Korea Electric is expected to generate 1.54 times less return on investment than Centrais Electricas. But when comparing it to its historical volatility, Korea Electric Power is 1.06 times less risky than Centrais Electricas. It trades about 0.22 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 556.00 in Centrais Electricas Brasileiras on November 4, 2024 and sell it today you would earn a total of 63.00 from holding Centrais Electricas Brasileiras or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Korea Electric Power |
| Centrais Electricas |
Korea Electric and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Centrais Electricas
The main advantage of trading using opposite Korea Electric and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' long position.| Korea Electric vs. Enel Chile SA | Korea Electric vs. Centrais Eltricas Brasileiras | Korea Electric vs. Central Puerto SA | Korea Electric vs. CMS Energy |
| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |