Correlation Between Korea Electric and LianBio ADR
Can any of the company-specific risk be diversified away by investing in both Korea Electric and LianBio ADR 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 LianBio ADR 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 LianBio ADR, you can compare the effects of market volatilities on Korea Electric and LianBio ADR 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 LianBio ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and LianBio ADR.
Diversification Opportunities for Korea Electric and LianBio ADR
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and LianBio is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and LianBio ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianBio ADR 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 LianBio ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianBio ADR has no effect on the direction of Korea Electric i.e., Korea Electric and LianBio ADR go up and down completely randomly.
Pair Corralation between Korea Electric and LianBio ADR
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 | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Korea Electric Power vs. LianBio ADR
Performance |
| Timeline |
| Korea Electric Power |
| LianBio ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Korea Electric and LianBio ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and LianBio ADR
The main advantage of trading using opposite Korea Electric and LianBio ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, LianBio ADR 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 LianBio ADR will offset losses from the drop in LianBio ADR'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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