Correlation Between Korea Electric and Medican Enterprises
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Medican Enterprises 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 Medican Enterprises 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 Medican Enterprises, you can compare the effects of market volatilities on Korea Electric and Medican Enterprises 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 Medican Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Medican Enterprises.
Diversification Opportunities for Korea Electric and Medican Enterprises
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Medican is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Medican Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medican Enterprises 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 Medican Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medican Enterprises has no effect on the direction of Korea Electric i.e., Korea Electric and Medican Enterprises go up and down completely randomly.
Pair Corralation between Korea Electric and Medican Enterprises
Considering the 90-day investment horizon Korea Electric is expected to generate 337.72 times less return on investment than Medican Enterprises. But when comparing it to its historical volatility, Korea Electric Power is 127.99 times less risky than Medican Enterprises. It trades about 0.09 of its potential returns per unit of risk. Medican Enterprises is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Medican Enterprises on October 23, 2024 and sell it today you would earn a total of 0.01 from holding Medican Enterprises or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Korea Electric Power vs. Medican Enterprises
Performance |
| Timeline |
| Korea Electric Power |
| Medican Enterprises |
Korea Electric and Medican Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Medican Enterprises
The main advantage of trading using opposite Korea Electric and Medican Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Medican Enterprises 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 Medican Enterprises will offset losses from the drop in Medican Enterprises' 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 |
| Medican Enterprises vs. Sanofi ADR | Medican Enterprises vs. AstraZeneca PLC ADR | Medican Enterprises vs. GlaxoSmithKline PLC ADR | Medican Enterprises vs. Merck Company |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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