Correlation Between Korea Electric and Procaps Group
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Procaps Group 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 Procaps Group 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 Procaps Group SA, you can compare the effects of market volatilities on Korea Electric and Procaps Group 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 Procaps Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Procaps Group.
Diversification Opportunities for Korea Electric and Procaps Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Procaps is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA 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 Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of Korea Electric i.e., Korea Electric and Procaps Group go up and down completely randomly.
Pair Corralation between Korea Electric and Procaps Group
Considering the 90-day investment horizon Korea Electric is expected to generate 12.63 times less return on investment than Procaps Group. But when comparing it to its historical volatility, Korea Electric Power is 12.61 times less risky than Procaps Group. It trades about 0.13 of its potential returns per unit of risk. Procaps Group SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Procaps Group SA on August 31, 2024 and sell it today you would earn a total of 29.00 from holding Procaps Group SA or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Procaps Group SA
Performance |
| Timeline |
| Korea Electric Power |
| Procaps Group SA |
Korea Electric and Procaps Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Procaps Group
The main advantage of trading using opposite Korea Electric and Procaps Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Procaps Group 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 Procaps Group will offset losses from the drop in Procaps Group'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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