Correlation Between Public Service and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Public Service 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 Public Service and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and Korea Electric Power, you can compare the effects of market volatilities on Public Service 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 Public Service with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Korea Electric.
Diversification Opportunities for Public Service and Korea Electric
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Public and Korea is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise 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 Public Service 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 Public Service Enterprise 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 Public Service i.e., Public Service and Korea Electric go up and down completely randomly.
Pair Corralation between Public Service and Korea Electric
Considering the 90-day investment horizon Public Service is expected to generate 1.47 times less return on investment than Korea Electric. But when comparing it to its historical volatility, Public Service Enterprise is 1.08 times less risky than Korea Electric. It trades about 0.08 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 819.00 in Korea Electric Power on August 28, 2024 and sell it today you would earn a total of 36.00 from holding Korea Electric Power or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Service Enterprise vs. Korea Electric Power
Performance |
| Timeline |
| Public Service Enterprise |
| Korea Electric Power |
Public Service and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and Korea Electric
The main advantage of trading using opposite Public Service and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service 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.| Public Service vs. CenterPoint Energy | Public Service vs. FirstEnergy | Public Service vs. Pinnacle West Capital | Public Service vs. Edison International |
| Korea Electric vs. Dominion Energy | Korea Electric vs. Consolidated Edison | Korea Electric vs. Eversource Energy | Korea Electric vs. FirstEnergy |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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