Correlation Between Korea Electric and ChromoCure
Can any of the company-specific risk be diversified away by investing in both Korea Electric and ChromoCure 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 ChromoCure 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 ChromoCure, you can compare the effects of market volatilities on Korea Electric and ChromoCure 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 ChromoCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and ChromoCure.
Diversification Opportunities for Korea Electric and ChromoCure
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and ChromoCure is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and ChromoCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChromoCure 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 ChromoCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChromoCure has no effect on the direction of Korea Electric i.e., Korea Electric and ChromoCure go up and down completely randomly.
Pair Corralation between Korea Electric and ChromoCure
If you would invest (100.00) in ChromoCure on October 13, 2024 and sell it today you would earn a total of 100.00 from holding ChromoCure or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Korea Electric Power vs. ChromoCure
Performance |
| Timeline |
| Korea Electric Power |
| ChromoCure |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Korea Electric and ChromoCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and ChromoCure
The main advantage of trading using opposite Korea Electric and ChromoCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, ChromoCure 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 ChromoCure will offset losses from the drop in ChromoCure'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 |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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