Correlation Between Jeju Bank and KT
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and KT 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 Jeju Bank and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and KT Corporation, you can compare the effects of market volatilities on Jeju Bank and KT 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 Jeju Bank with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and KT.
Diversification Opportunities for Jeju Bank and KT
Very good diversification
The 3 months correlation between Jeju and KT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Jeju Bank 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 Jeju Bank are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Jeju Bank i.e., Jeju Bank and KT go up and down completely randomly.
Pair Corralation between Jeju Bank and KT
Assuming the 90 days trading horizon Jeju Bank is expected to under-perform the KT. In addition to that, Jeju Bank is 2.14 times more volatile than KT Corporation. It trades about -0.03 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.07 per unit of volatility. If you would invest 3,670,274 in KT Corporation on November 3, 2024 and sell it today you would earn a total of 1,129,726 from holding KT Corporation or generate 30.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. KT Corp.
Performance |
| Timeline |
| Jeju Bank |
| KT Corporation |
Jeju Bank and KT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and KT
The main advantage of trading using opposite Jeju Bank and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, KT 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 will offset losses from the drop in KT's long position.| Jeju Bank vs. Anam Electronics Co | Jeju Bank vs. Vissem Electronics Co | Jeju Bank vs. Ssangyong Information Communication | Jeju Bank vs. ABCO Electronics Co |
| KT vs. DONGKUK TED METAL | KT vs. Neungyule Education | KT vs. Nable Communications | KT vs. Seoul Electronics Telecom |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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