Correlation Between KT Submarine and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both KT Submarine and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on KT Submarine and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT Submarine and ENERGYMACHINERY KOREA.
Diversification Opportunities for KT Submarine and ENERGYMACHINERY KOREA
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 060370 and ENERGYMACHINERY is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of KT Submarine i.e., KT Submarine and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between KT Submarine and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon KT Submarine Telecom is expected to generate 1.95 times more return on investment than ENERGYMACHINERY KOREA. However, KT Submarine is 1.95 times more volatile than ENERGYMACHINERY KOREA CoLtd. It trades about 0.12 of its potential returns per unit of risk. ENERGYMACHINERY KOREA CoLtd is currently generating about -0.19 per unit of risk. If you would invest 1,572,000 in KT Submarine Telecom on November 8, 2024 and sell it today you would earn a total of 96,000 from holding KT Submarine Telecom or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Submarine Telecom vs. ENERGYMACHINERY KOREA CoLtd
Performance |
| Timeline |
| KT Submarine Telecom |
| ENERGYMACHINERY KOREA |
KT Submarine and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT Submarine and ENERGYMACHINERY KOREA
The main advantage of trading using opposite KT Submarine and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT Submarine position performs unexpectedly, ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.| KT Submarine vs. CG Hi Tech | KT Submarine vs. Polaris Office Corp | KT Submarine vs. RFTech Co | KT Submarine vs. Hankook Furniture Co |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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