Correlation Between KT Submarine and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both KT Submarine and Hyundai Engineering 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 Submarine and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Submarine Telecom and Hyundai Engineering Construction, you can compare the effects of market volatilities on KT Submarine and Hyundai Engineering 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 Submarine with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT Submarine and Hyundai Engineering.
Diversification Opportunities for KT Submarine and Hyundai Engineering
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 060370 and Hyundai is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and KT Submarine 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 Submarine Telecom are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of KT Submarine i.e., KT Submarine and Hyundai Engineering go up and down completely randomly.
Pair Corralation between KT Submarine and Hyundai Engineering
Assuming the 90 days trading horizon KT Submarine Telecom is expected to generate 2.19 times more return on investment than Hyundai Engineering. However, KT Submarine is 2.19 times more volatile than Hyundai Engineering Construction. It trades about 0.05 of its potential returns per unit of risk. Hyundai Engineering Construction is currently generating about -0.05 per unit of risk. If you would invest 1,138,000 in KT Submarine Telecom on October 16, 2024 and sell it today you would earn a total of 507,000 from holding KT Submarine Telecom or generate 44.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.62% |
| Values | Daily Returns |
KT Submarine Telecom vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| KT Submarine Telecom |
| Hyundai Engineering |
KT Submarine and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT Submarine and Hyundai Engineering
The main advantage of trading using opposite KT Submarine and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT Submarine position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| KT Submarine vs. Incar Financial Service | KT Submarine vs. KB Financial Group | KT Submarine vs. MetaLabs Co | KT Submarine vs. Dongil Metal Co |
| Hyundai Engineering vs. KT Submarine Telecom | Hyundai Engineering vs. E Investment Development | Hyundai Engineering vs. Korea Information Communications | Hyundai Engineering vs. Polaris Office Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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