Correlation Between Seoul Food and KT Submarine
Can any of the company-specific risk be diversified away by investing in both Seoul Food and KT Submarine 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 Seoul Food and KT Submarine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and KT Submarine Telecom, you can compare the effects of market volatilities on Seoul Food and KT Submarine 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 Seoul Food with a short position of KT Submarine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and KT Submarine.
Diversification Opportunities for Seoul Food and KT Submarine
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and 060370 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and KT Submarine Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Submarine Telecom and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with KT Submarine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Submarine Telecom has no effect on the direction of Seoul Food i.e., Seoul Food and KT Submarine go up and down completely randomly.
Pair Corralation between Seoul Food and KT Submarine
Assuming the 90 days trading horizon Seoul Food is expected to generate 35.95 times less return on investment than KT Submarine. But when comparing it to its historical volatility, Seoul Food Industrial is 2.77 times less risky than KT Submarine. It trades about 0.01 of its potential returns per unit of risk. KT Submarine Telecom is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,266,000 in KT Submarine Telecom on September 14, 2024 and sell it today you would earn a total of 157,000 from holding KT Submarine Telecom or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. KT Submarine Telecom
Performance |
| Timeline |
| Seoul Food Industrial |
| KT Submarine Telecom |
Seoul Food and KT Submarine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and KT Submarine
The main advantage of trading using opposite Seoul Food and KT Submarine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, KT Submarine 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 KT Submarine will offset losses from the drop in KT Submarine's long position.| Seoul Food vs. Samsung Electronics Co | Seoul Food vs. Samsung Electronics Co | Seoul Food vs. SK Hynix | Seoul Food vs. POSCO Holdings |
| KT Submarine vs. Samsung Electronics Co | KT Submarine vs. Samsung Electronics Co | KT Submarine vs. SK Hynix | KT Submarine vs. POSCO Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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