Correlation Between KT and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both KT and Foodnamoo 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 Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Foodnamoo, you can compare the effects of market volatilities on KT and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Foodnamoo.
Diversification Opportunities for KT and Foodnamoo
Excellent diversification
The 3 months correlation between KT and Foodnamoo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of KT i.e., KT and Foodnamoo go up and down completely randomly.
Pair Corralation between KT and Foodnamoo
Assuming the 90 days trading horizon KT Corporation is expected to generate 0.38 times more return on investment than Foodnamoo. However, KT Corporation is 2.64 times less risky than Foodnamoo. It trades about 0.06 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.05 per unit of risk. If you would invest 3,262,934 in KT Corporation on September 2, 2024 and sell it today you would earn a total of 1,617,066 from holding KT Corporation or generate 49.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Corp. vs. Foodnamoo
Performance |
| Timeline |
| KT Corporation |
| Foodnamoo |
KT and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Foodnamoo
The main advantage of trading using opposite KT and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| KT vs. Jeju Bank | KT vs. Samyoung Electronics Co | KT vs. Jinro Distillers Co | KT vs. Koryo Credit Information |
| Foodnamoo vs. Busan Industrial Co | Foodnamoo vs. Busan Ind | Foodnamoo vs. Mirae Asset Daewoo | Foodnamoo vs. Finebesteel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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