Correlation Between Moadata and KEPCO Engineering

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

By analyzing existing cross correlation between Moadata Co and KEPCO Engineering Construction, you can compare the effects of market volatilities on Moadata and KEPCO Engineering 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 Moadata with a short position of KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moadata and KEPCO Engineering.

Diversification Opportunities for Moadata and KEPCO Engineering

0.16

Correlation Coefficient

Moadata  KEPCO Engineering

Average diversification

The 3 months correlation between Moadata and KEPCO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Moadata Co and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering and Moadata 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 Moadata Co are associated (or correlated) with KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of Moadata i.e., Moadata and KEPCO Engineering go up and down completely randomly.

Pair Corralation between Moadata and KEPCO Engineering

Assuming the 90 days trading horizon Moadata Co is expected to under-perform the KEPCO Engineering. In addition to that, Moadata is 1.44 times more volatile than KEPCO Engineering Construction. It trades about -0.1 of its total potential returns per unit of risk. KEPCO Engineering Construction is currently generating about 0.12 per unit of volatility. If you would invest  5,350,100  in KEPCO Engineering Construction on December 25, 2024 and sell it today you would earn a total of  719,900  from holding KEPCO Engineering Construction or generate 13.46% return on investment over 90 days.

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

Moadata Co  vs.  KEPCO Engineering Construction

Moadata

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moadata Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KEPCO Engineering

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KEPCO Engineering Construction are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KEPCO Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moadata and KEPCO Engineering

The main advantage of trading using opposite Moadata and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moadata position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.

The idea behind Moadata Co and KEPCO Engineering Construction 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.