Correlation Between OGE Energy and Korea Electric
Can any of the company-specific risk be diversified away by investing in both OGE Energy and Korea Electric 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 OGE Energy and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OGE Energy and Korea Electric Power, you can compare the effects of market volatilities on OGE Energy and Korea Electric 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 OGE Energy with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of OGE Energy and Korea Electric.
Diversification Opportunities for OGE Energy and Korea Electric
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between OGE and Korea is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding OGE Energy and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power and OGE Energy 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 OGE Energy are associated (or correlated) with Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of OGE Energy i.e., OGE Energy and Korea Electric go up and down completely randomly.
Pair Corralation between OGE Energy and Korea Electric
Considering the 90-day investment horizon OGE Energy is expected to generate 0.6 times more return on investment than Korea Electric. However, OGE Energy is 1.66 times less risky than Korea Electric. It trades about 0.33 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.17 per unit of risk. If you would invest 3,999 in OGE Energy on September 1, 2024 and sell it today you would earn a total of 397.00 from holding OGE Energy or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OGE Energy vs. Korea Electric Power
Performance |
| Timeline |
| OGE Energy |
| Korea Electric Power |
OGE Energy and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OGE Energy and Korea Electric
The main advantage of trading using opposite OGE Energy and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OGE Energy position performs unexpectedly, Korea Electric 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 Korea Electric will offset losses from the drop in Korea Electric's long position.| OGE Energy vs. Alliant Energy Corp | OGE Energy vs. CMS Energy | OGE Energy vs. CenterPoint Energy | OGE Energy vs. Pinnacle West Capital |
| Korea Electric vs. MGE Energy | Korea Electric vs. CMS Energy | Korea Electric vs. OGE Energy | Korea Electric vs. DTE Energy |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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