Correlation Between Korea Electric and Lixte Biotechnology
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Lixte Biotechnology 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 Lixte Biotechnology 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 Lixte Biotechnology Holdings, you can compare the effects of market volatilities on Korea Electric and Lixte Biotechnology 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 Lixte Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Lixte Biotechnology.
Diversification Opportunities for Korea Electric and Lixte Biotechnology
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Lixte is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Lixte Biotechnology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixte Biotechnology 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 Lixte Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixte Biotechnology has no effect on the direction of Korea Electric i.e., Korea Electric and Lixte Biotechnology go up and down completely randomly.
Pair Corralation between Korea Electric and Lixte Biotechnology
Considering the 90-day investment horizon Korea Electric is expected to generate 15.34 times less return on investment than Lixte Biotechnology. But when comparing it to its historical volatility, Korea Electric Power is 8.16 times less risky than Lixte Biotechnology. It trades about 0.03 of its potential returns per unit of risk. Lixte Biotechnology Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7.70 in Lixte Biotechnology Holdings on August 31, 2024 and sell it today you would lose (4.92) from holding Lixte Biotechnology Holdings or give up 63.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Lixte Biotechnology Holdings
Performance |
| Timeline |
| Korea Electric Power |
| Lixte Biotechnology |
Korea Electric and Lixte Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Lixte Biotechnology
The main advantage of trading using opposite Korea Electric and Lixte Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Lixte Biotechnology 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 Lixte Biotechnology will offset losses from the drop in Lixte Biotechnology'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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