Correlation Between Korea Electric and THC Biomed
Can any of the company-specific risk be diversified away by investing in both Korea Electric and THC Biomed 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 THC Biomed 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 THC Biomed Intl, you can compare the effects of market volatilities on Korea Electric and THC Biomed 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 THC Biomed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and THC Biomed.
Diversification Opportunities for Korea Electric and THC Biomed
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and THC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and THC Biomed Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THC Biomed Intl 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 THC Biomed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THC Biomed Intl has no effect on the direction of Korea Electric i.e., Korea Electric and THC Biomed go up and down completely randomly.
Pair Corralation between Korea Electric and THC Biomed
Considering the 90-day investment horizon Korea Electric is expected to generate 48.9 times less return on investment than THC Biomed. But when comparing it to its historical volatility, Korea Electric Power is 15.52 times less risky than THC Biomed. It trades about 0.04 of its potential returns per unit of risk. THC Biomed Intl is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.60 in THC Biomed Intl on August 29, 2024 and sell it today you would lose (1.50) from holding THC Biomed Intl or give up 93.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Korea Electric Power vs. THC Biomed Intl
Performance |
| Timeline |
| Korea Electric Power |
| THC Biomed Intl |
Korea Electric and THC Biomed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and THC Biomed
The main advantage of trading using opposite Korea Electric and THC Biomed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, THC Biomed 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 THC Biomed will offset losses from the drop in THC Biomed'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 |
| THC Biomed vs. Speakeasy Cannabis Club | THC Biomed vs. City View Green | THC Biomed vs. Benchmark Botanics | THC Biomed vs. Ravenquest Biomed |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |