Correlation Between KT and Jeju Bank
Can any of the company-specific risk be diversified away by investing in both KT and Jeju Bank 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 KT and Jeju Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Jeju Bank, you can compare the effects of market volatilities on KT and Jeju Bank 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 KT with a short position of Jeju Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Jeju Bank.
Diversification Opportunities for KT and Jeju Bank
Very good diversification
The 3 months correlation between KT and Jeju is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Jeju Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Bank and KT 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 KT Corporation are associated (or correlated) with Jeju Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Bank has no effect on the direction of KT i.e., KT and Jeju Bank go up and down completely randomly.
Pair Corralation between KT and Jeju Bank
Assuming the 90 days trading horizon KT Corporation is expected to generate 0.47 times more return on investment than Jeju Bank. However, KT Corporation is 2.14 times less risky than Jeju Bank. It trades about 0.07 of its potential returns per unit of risk. Jeju Bank is currently generating about -0.03 per unit of risk. 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 |
KT Corp. vs. Jeju Bank
Performance |
| Timeline |
| KT Corporation |
| Jeju Bank |
KT and Jeju Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Jeju Bank
The main advantage of trading using opposite KT and Jeju Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Jeju Bank 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 Jeju Bank will offset losses from the drop in Jeju Bank's long position.| KT vs. Mobile Appliance | KT vs. Mobileleader CoLtd | KT vs. Korea Shipbuilding Offshore | KT vs. Digital Power Communications |
| Jeju Bank vs. Anam Electronics Co | Jeju Bank vs. Vissem Electronics Co | Jeju Bank vs. Ssangyong Information Communication | Jeju Bank vs. ABCO Electronics Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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