Correlation Between KT and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both KT and YG Entertainment 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 YG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and YG Entertainment, you can compare the effects of market volatilities on KT and YG Entertainment 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 YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and YG Entertainment.
Diversification Opportunities for KT and YG Entertainment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KT and 122870 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment 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 YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of KT i.e., KT and YG Entertainment go up and down completely randomly.
Pair Corralation between KT and YG Entertainment
Assuming the 90 days trading horizon KT is expected to generate 1.36 times less return on investment than YG Entertainment. In addition to that, KT is 1.37 times more volatile than YG Entertainment. It trades about 0.17 of its total potential returns per unit of risk. YG Entertainment is currently generating about 0.32 per unit of volatility. If you would invest 4,160,000 in YG Entertainment on September 2, 2024 and sell it today you would earn a total of 615,000 from holding YG Entertainment or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Corp. vs. YG Entertainment
Performance |
| Timeline |
| KT Corporation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| YG Entertainment |
KT and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and YG Entertainment
The main advantage of trading using opposite KT and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, YG Entertainment 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.| KT vs. Jeju Bank | KT vs. Samyoung Electronics Co | KT vs. Jinro Distillers Co | KT vs. Koryo Credit Information |
| YG Entertainment vs. JYP Entertainment | YG Entertainment vs. SM Entertainment Co | YG Entertainment vs. Cube Entertainment | YG Entertainment vs. FNC Entertainment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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