Correlation Between China Construction and Korea Electric
Can any of the company-specific risk be diversified away by investing in both China Construction 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 China Construction and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Construction Bank and Korea Electric Power, you can compare the effects of market volatilities on China Construction 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 China Construction with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Korea Electric.
Diversification Opportunities for China Construction and Korea Electric
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Korea is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank 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 China Construction 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 China Construction Bank 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 China Construction i.e., China Construction and Korea Electric go up and down completely randomly.
Pair Corralation between China Construction and Korea Electric
Assuming the 90 days horizon China Construction is expected to generate 2.32 times less return on investment than Korea Electric. In addition to that, China Construction is 1.46 times more volatile than Korea Electric Power. It trades about 0.05 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.16 per unit of volatility. If you would invest 1,364 in Korea Electric Power on September 8, 2025 and sell it today you would earn a total of 388.00 from holding Korea Electric Power or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Korea Electric Power
Performance |
| Timeline |
| China Construction Bank |
| Korea Electric Power |
China Construction and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Korea Electric
The main advantage of trading using opposite China Construction and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction 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.| China Construction vs. EROAD Limited | China Construction vs. Quantum Medical Transport | China Construction vs. Information Planning LTD | China Construction vs. General Datacomm Industries |
| Korea Electric vs. Mitsui Chemicals ADR | Korea Electric vs. Video Display | Korea Electric vs. Sumitomo Chemical Co | Korea Electric vs. Quaker Chemical |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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