Correlation Between KT and Top Material
Can any of the company-specific risk be diversified away by investing in both KT and Top Material 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 Top Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Top Material Co, you can compare the effects of market volatilities on KT and Top Material 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 Top Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Top Material.
Diversification Opportunities for KT and Top Material
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KT and Top is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material 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 Top Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Material has no effect on the direction of KT i.e., KT and Top Material go up and down completely randomly.
Pair Corralation between KT and Top Material
Assuming the 90 days trading horizon KT Corporation is expected to generate 0.5 times more return on investment than Top Material. However, KT Corporation is 2.01 times less risky than Top Material. It trades about 0.15 of its potential returns per unit of risk. Top Material Co is currently generating about -0.13 per unit of risk. If you would invest 3,581,923 in KT Corporation on September 3, 2024 and sell it today you would earn a total of 1,298,077 from holding KT Corporation or generate 36.24% 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. Top Material Co
Performance |
| Timeline |
| KT Corporation |
| Top Material |
KT and Top Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Top Material
The main advantage of trading using opposite KT and Top Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Top Material 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 Top Material will offset losses from the drop in Top Material's long position.The idea behind KT Corporation and Top Material Co 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.| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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