Correlation Between Korea Electric and ESSA Pharma
Can any of the company-specific risk be diversified away by investing in both Korea Electric and ESSA Pharma 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 ESSA Pharma 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 ESSA Pharma, you can compare the effects of market volatilities on Korea Electric and ESSA Pharma 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 ESSA Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and ESSA Pharma.
Diversification Opportunities for Korea Electric and ESSA Pharma
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and ESSA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and ESSA Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Pharma 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 ESSA Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Pharma has no effect on the direction of Korea Electric i.e., Korea Electric and ESSA Pharma go up and down completely randomly.
Pair Corralation between Korea Electric and ESSA Pharma
Considering the 90-day investment horizon Korea Electric Power is expected to generate 0.13 times more return on investment than ESSA Pharma. However, Korea Electric Power is 7.51 times less risky than ESSA Pharma. It trades about 0.12 of its potential returns per unit of risk. ESSA Pharma is currently generating about -0.14 per unit of risk. If you would invest 825.00 in Korea Electric Power on August 30, 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. ESSA Pharma
Performance |
| Timeline |
| Korea Electric Power |
| ESSA Pharma |
Korea Electric and ESSA Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and ESSA Pharma
The main advantage of trading using opposite Korea Electric and ESSA Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, ESSA Pharma 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 ESSA Pharma will offset losses from the drop in ESSA Pharma'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 |
| ESSA Pharma vs. Ikena Oncology | ESSA Pharma vs. Eliem Therapeutics | ESSA Pharma vs. HCW Biologics | ESSA Pharma vs. RenovoRx |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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