Correlation Between Korea Computer and KTB Investment
Can any of the company-specific risk be diversified away by investing in both Korea Computer and KTB Investment 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 Korea Computer and KTB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and KTB Investment Securities, you can compare the effects of market volatilities on Korea Computer and KTB Investment 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 Korea Computer with a short position of KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and KTB Investment.
Diversification Opportunities for Korea Computer and KTB Investment
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and KTB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities and Korea Computer 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 Korea Computer are associated (or correlated) with KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Korea Computer i.e., Korea Computer and KTB Investment go up and down completely randomly.
Pair Corralation between Korea Computer and KTB Investment
Assuming the 90 days trading horizon Korea Computer is expected to generate 0.99 times more return on investment than KTB Investment. However, Korea Computer is 1.01 times less risky than KTB Investment. It trades about -0.11 of its potential returns per unit of risk. KTB Investment Securities is currently generating about -0.29 per unit of risk. If you would invest 518,000 in Korea Computer on November 8, 2024 and sell it today you would lose (21,000) from holding Korea Computer or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer vs. KTB Investment Securities
Performance |
| Timeline |
| Korea Computer |
| KTB Investment Securities |
Korea Computer and KTB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and KTB Investment
The main advantage of trading using opposite Korea Computer and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, KTB Investment 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 KTB Investment will offset losses from the drop in KTB Investment's long position.| Korea Computer vs. Samsung Electronics Co | Korea Computer vs. Samsung Electronics Co | Korea Computer vs. Hyundai Motor Co | Korea Computer vs. Hyundai Motor |
| KTB Investment vs. SK Chemicals Co | KTB Investment vs. Playgram Co | KTB Investment vs. Shinhan Financial Group | KTB Investment vs. SAMG 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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