Correlation Between KT and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both KT and Daejoo Electronic 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 Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Daejoo Electronic Materials, you can compare the effects of market volatilities on KT and Daejoo Electronic 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 Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Daejoo Electronic.
Diversification Opportunities for KT and Daejoo Electronic
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KT and Daejoo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic 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 Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of KT i.e., KT and Daejoo Electronic go up and down completely randomly.
Pair Corralation between KT and Daejoo Electronic
Assuming the 90 days trading horizon KT Corporation is expected to generate 0.57 times more return on investment than Daejoo Electronic. However, KT Corporation is 1.74 times less risky than Daejoo Electronic. It trades about 0.06 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about -0.07 per unit of risk. If you would invest 4,350,000 in KT Corporation on September 13, 2024 and sell it today you would earn a total of 110,000 from holding KT Corporation or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Corp. vs. Daejoo Electronic Materials
Performance |
| Timeline |
| KT Corporation |
| Daejoo Electronic |
KT and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Daejoo Electronic
The main advantage of trading using opposite KT and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.The idea behind KT Corporation and Daejoo Electronic Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Daejoo Electronic vs. Cube Entertainment | Daejoo Electronic vs. Dreamus Company | Daejoo Electronic vs. LG Energy Solution | Daejoo Electronic vs. Dongwon System |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |