Correlation Between Korea Electric and IDACORP
Can any of the company-specific risk be diversified away by investing in both Korea Electric and IDACORP 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 IDACORP 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 IDACORP, you can compare the effects of market volatilities on Korea Electric and IDACORP 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 IDACORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and IDACORP.
Diversification Opportunities for Korea Electric and IDACORP
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and IDACORP is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP 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 IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of Korea Electric i.e., Korea Electric and IDACORP go up and down completely randomly.
Pair Corralation between Korea Electric and IDACORP
Considering the 90-day investment horizon Korea Electric is expected to generate 2.02 times less return on investment than IDACORP. In addition to that, Korea Electric is 1.79 times more volatile than IDACORP. It trades about 0.01 of its total potential returns per unit of risk. IDACORP is currently generating about 0.03 per unit of volatility. If you would invest 9,537 in IDACORP on November 5, 2024 and sell it today you would earn a total of 1,457 from holding IDACORP or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Korea Electric Power vs. IDACORP
Performance |
| Timeline |
| Korea Electric Power |
| IDACORP |
Korea Electric and IDACORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and IDACORP
The main advantage of trading using opposite Korea Electric and IDACORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, IDACORP 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 IDACORP will offset losses from the drop in IDACORP'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 |
| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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