Correlation Between Korea Electric and Genie Energy
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Genie Energy 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 Genie Energy 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 Genie Energy, you can compare the effects of market volatilities on Korea Electric and Genie Energy 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 Genie Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Genie Energy.
Diversification Opportunities for Korea Electric and Genie Energy
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Genie is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy 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 Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of Korea Electric i.e., Korea Electric and Genie Energy go up and down completely randomly.
Pair Corralation between Korea Electric and Genie Energy
Considering the 90-day investment horizon Korea Electric is expected to generate 13.13 times less return on investment than Genie Energy. But when comparing it to its historical volatility, Korea Electric Power is 1.37 times less risky than Genie Energy. It trades about 0.0 of its potential returns per unit of risk. Genie Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,101 in Genie Energy on October 25, 2024 and sell it today you would earn a total of 321.00 from holding Genie Energy or generate 29.16% 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. Genie Energy
Performance |
| Timeline |
| Korea Electric Power |
| Genie Energy |
Korea Electric and Genie Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Genie Energy
The main advantage of trading using opposite Korea Electric and Genie Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Genie Energy 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 Genie Energy will offset losses from the drop in Genie Energy'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 |
| Genie Energy vs. Centrais Electricas Brasileiras | Genie Energy vs. Central Puerto SA | Genie Energy vs. Korea Electric Power | Genie Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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