Correlation Between Worldex Industry and Korea Electric

Can any of the company-specific risk be diversified away by investing in both Worldex Industry 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 Worldex Industry and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Worldex Industry Trading and Korea Electric Power, you can compare the effects of market volatilities on Worldex Industry 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 Worldex Industry with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldex Industry and Korea Electric.

Diversification Opportunities for Worldex Industry and Korea Electric

0.43

Correlation Coefficient

Worldex Industry  Korea Electric

Very weak diversification

The 3 months correlation between Worldex and Korea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Worldex Industry Trading 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 Worldex Industry 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 Worldex Industry Trading 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 Worldex Industry i.e., Worldex Industry and Korea Electric go up and down completely randomly.

Pair Corralation between Worldex Industry and Korea Electric

Assuming the 90 days trading horizon Worldex Industry Trading is expected to generate 1.47 times more return on investment than Korea Electric. However, Worldex Industry is 1.47 times more volatile than Korea Electric Power. It trades about 0.15 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.09 per unit of risk. If you would invest  1,646,971  in Worldex Industry Trading on December 24, 2024 and sell it today you would earn a total of  378,029  from holding Worldex Industry Trading or generate 22.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Worldex Industry Trading  vs.  Korea Electric Power

Worldex Industry Trading

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worldex Industry Trading are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldex Industry sustained solid returns over the last few months and may actually be approaching a breakup point.

Korea Electric Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Electric Power are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Electric may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Worldex Industry and Korea Electric

The main advantage of trading using opposite Worldex Industry and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldex Industry 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.

The idea behind Worldex Industry Trading and Korea Electric Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.