Correlation Between KT and Lotte Data
Can any of the company-specific risk be diversified away by investing in both KT and Lotte Data 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 Lotte Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Lotte Data Communication, you can compare the effects of market volatilities on KT and Lotte Data 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 Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Lotte Data.
Diversification Opportunities for KT and Lotte Data
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KT and Lotte is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication 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 Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of KT i.e., KT and Lotte Data go up and down completely randomly.
Pair Corralation between KT and Lotte Data
Assuming the 90 days trading horizon KT Corporation is expected to generate 1.05 times more return on investment than Lotte Data. However, KT is 1.05 times more volatile than Lotte Data Communication. It trades about 0.15 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of risk. If you would invest 4,375,000 in KT Corporation on August 30, 2024 and sell it today you would earn a total of 385,000 from holding KT Corporation or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KT Corp. vs. Lotte Data Communication
Performance |
| Timeline |
| KT Corporation |
| Lotte Data Communication |
KT and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Lotte Data
The main advantage of trading using opposite KT and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Lotte Data 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 Lotte Data will offset losses from the drop in Lotte Data's long position.| KT vs. Sungdo Engineering Construction | KT vs. Lotte Energy Materials | KT vs. Union Materials Corp | KT vs. PI Advanced Materials |
| Lotte Data vs. Ssangyong Information Communication | Lotte Data vs. FNSTech Co | Lotte Data vs. Daishin Information Communications | Lotte Data vs. Innowireless 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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