Correlation Between Kyung Chang and KT
Can any of the company-specific risk be diversified away by investing in both Kyung Chang 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 Kyung Chang and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kyung Chang Industrial and KT Corporation, you can compare the effects of market volatilities on Kyung Chang 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 Kyung Chang with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and KT.
Diversification Opportunities for Kyung Chang and KT
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kyung and KT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Kyung Chang 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 Kyung Chang Industrial 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 Kyung Chang i.e., Kyung Chang and KT go up and down completely randomly.
Pair Corralation between Kyung Chang and KT
Assuming the 90 days trading horizon Kyung Chang Industrial is expected to generate 1.8 times more return on investment than KT. However, Kyung Chang is 1.8 times more volatile than KT Corporation. It trades about 0.15 of its potential returns per unit of risk. KT Corporation is currently generating about 0.04 per unit of risk. If you would invest 192,900 in Kyung Chang Industrial on October 23, 2024 and sell it today you would earn a total of 12,100 from holding Kyung Chang Industrial or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Kyung Chang Industrial vs. KT Corp.
Performance |
| Timeline |
| Kyung Chang Industrial |
| KT Corporation |
Kyung Chang and KT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and KT
The main advantage of trading using opposite Kyung Chang and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang 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.| Kyung Chang vs. Duksan Hi Metal | Kyung Chang vs. Seoul Food Industrial | Kyung Chang vs. Daejung Chemicals Metals | Kyung Chang vs. Cheryong Industrial CoLtd |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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