Correlation Between Korea Electric and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison, you can compare the effects of market volatilities on Korea Electric and Consolidated Edison 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 Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Consolidated Edison.
Diversification Opportunities for Korea Electric and Consolidated Edison
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Korea and Consolidated is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison 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 Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Korea Electric i.e., Korea Electric and Consolidated Edison go up and down completely randomly.
Pair Corralation between Korea Electric and Consolidated Edison
Considering the 90-day investment horizon Korea Electric Power is expected to under-perform the Consolidated Edison. In addition to that, Korea Electric is 1.86 times more volatile than Consolidated Edison. It trades about -0.08 of its total potential returns per unit of risk. Consolidated Edison is currently generating about -0.07 per unit of volatility. If you would invest 9,914 in Consolidated Edison on November 1, 2024 and sell it today you would lose (528.00) from holding Consolidated Edison or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Consolidated Edison
Performance |
| Timeline |
| Korea Electric Power |
| Consolidated Edison |
Korea Electric and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Consolidated Edison
The main advantage of trading using opposite Korea Electric and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's 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 |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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