Correlation Between Solar Alliance and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Solar Alliance 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 Solar Alliance and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Alliance Energy and Korea Electric Power, you can compare the effects of market volatilities on Solar Alliance 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 Solar Alliance with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Korea Electric.
Diversification Opportunities for Solar Alliance and Korea Electric
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solar and Korea is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance 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 Solar Alliance 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 Solar Alliance 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 Solar Alliance i.e., Solar Alliance and Korea Electric go up and down completely randomly.
Pair Corralation between Solar Alliance and Korea Electric
Assuming the 90 days horizon Solar Alliance Energy is expected to under-perform the Korea Electric. In addition to that, Solar Alliance is 2.65 times more volatile than Korea Electric Power. It trades about -0.15 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.17 per unit of volatility. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. Korea Electric Power
Performance |
| Timeline |
| Solar Alliance Energy |
| Korea Electric Power |
Solar Alliance and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and Korea Electric
The main advantage of trading using opposite Solar Alliance and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance 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.| Solar Alliance vs. Nextera Energy | Solar Alliance vs. Consumers Energy | Solar Alliance vs. Duke Energy | Solar Alliance vs. Centrais Electricas Brasileiras |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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