Correlation Between Korea Electric and Haleon Plc
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Haleon Plc 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 Haleon Plc 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 Haleon plc, you can compare the effects of market volatilities on Korea Electric and Haleon Plc 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 Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Haleon Plc.
Diversification Opportunities for Korea Electric and Haleon Plc
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Haleon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc 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 Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of Korea Electric i.e., Korea Electric and Haleon Plc go up and down completely randomly.
Pair Corralation between Korea Electric and Haleon Plc
Considering the 90-day investment horizon Korea Electric Power is expected to generate 2.17 times more return on investment than Haleon Plc. However, Korea Electric is 2.17 times more volatile than Haleon plc. It trades about 0.11 of its potential returns per unit of risk. Haleon plc is currently generating about -0.19 per unit of risk. If you would invest 819.00 in Korea Electric Power on August 28, 2024 and sell it today you would earn a total of 36.00 from holding Korea Electric Power or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Haleon plc
Performance |
| Timeline |
| Korea Electric Power |
| Haleon plc |
Korea Electric and Haleon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Haleon Plc
The main advantage of trading using opposite Korea Electric and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Haleon Plc 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 Haleon Plc will offset losses from the drop in Haleon Plc's long position.| Korea Electric vs. Dominion Energy | Korea Electric vs. Consolidated Edison | Korea Electric vs. Eversource Energy | Korea Electric vs. FirstEnergy |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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