Correlation Between Korea Electric and Arcus Biosciences
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Arcus Biosciences 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 Arcus Biosciences 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 Arcus Biosciences, you can compare the effects of market volatilities on Korea Electric and Arcus Biosciences 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 Arcus Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Arcus Biosciences.
Diversification Opportunities for Korea Electric and Arcus Biosciences
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Arcus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Arcus Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcus Biosciences 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 Arcus Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcus Biosciences has no effect on the direction of Korea Electric i.e., Korea Electric and Arcus Biosciences go up and down completely randomly.
Pair Corralation between Korea Electric and Arcus Biosciences
Considering the 90-day investment horizon Korea Electric Power is expected to generate 0.58 times more return on investment than Arcus Biosciences. However, Korea Electric Power is 1.72 times less risky than Arcus Biosciences. It trades about 0.17 of its potential returns per unit of risk. Arcus Biosciences is currently generating about 0.03 per unit of risk. If you would invest 835.00 in Korea Electric Power on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Korea Electric Power or generate 7.78% 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. Arcus Biosciences
Performance |
| Timeline |
| Korea Electric Power |
| Arcus Biosciences |
Korea Electric and Arcus Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Arcus Biosciences
The main advantage of trading using opposite Korea Electric and Arcus Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Arcus Biosciences 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 Arcus Biosciences will offset losses from the drop in Arcus Biosciences' long position.| Korea Electric vs. MGE Energy | Korea Electric vs. CMS Energy | Korea Electric vs. OGE Energy | Korea Electric vs. DTE 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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