Correlation Between Korea Electric and Entergy New
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Entergy New 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 Entergy New 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 Entergy New Orleans, you can compare the effects of market volatilities on Korea Electric and Entergy New 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 Entergy New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Entergy New.
Diversification Opportunities for Korea Electric and Entergy New
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Entergy is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans 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 Entergy New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of Korea Electric i.e., Korea Electric and Entergy New go up and down completely randomly.
Pair Corralation between Korea Electric and Entergy New
Considering the 90-day investment horizon Korea Electric Power is expected to generate 1.83 times more return on investment than Entergy New. However, Korea Electric is 1.83 times more volatile than Entergy New Orleans. It trades about 0.13 of its potential returns per unit of risk. Entergy New Orleans is currently generating about -0.03 per unit of risk. If you would invest 825.00 in Korea Electric Power on August 31, 2024 and sell it today you would earn a total of 47.00 from holding Korea Electric Power or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Entergy New Orleans
Performance |
| Timeline |
| Korea Electric Power |
| Entergy New Orleans |
Korea Electric and Entergy New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Entergy New
The main advantage of trading using opposite Korea Electric and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Entergy New 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 Entergy New will offset losses from the drop in Entergy New'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 |
| Entergy New vs. Entergy New Orleans | Entergy New vs. Entergy Arkansas LLC | Entergy New vs. Entergy Mississippi LLC | Entergy New vs. Entergy Louisiana LLC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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