Correlation Between KT Submarine and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both KT Submarine and Digital Imaging 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 Digital Imaging 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 Digital Imaging Technology, you can compare the effects of market volatilities on KT Submarine and Digital Imaging 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 Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT Submarine and Digital Imaging.
Diversification Opportunities for KT Submarine and Digital Imaging
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 060370 and Digital is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech 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 Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of KT Submarine i.e., KT Submarine and Digital Imaging go up and down completely randomly.
Pair Corralation between KT Submarine and Digital Imaging
Assuming the 90 days trading horizon KT Submarine is expected to generate 1.06 times less return on investment than Digital Imaging. But when comparing it to its historical volatility, KT Submarine Telecom is 1.4 times less risky than Digital Imaging. It trades about 0.08 of its potential returns per unit of risk. Digital Imaging Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 516,813 in Digital Imaging Technology on September 14, 2024 and sell it today you would earn a total of 658,187 from holding Digital Imaging Technology or generate 127.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.63% |
| Values | Daily Returns |
KT Submarine Telecom vs. Digital Imaging Technology
Performance |
| Timeline |
| KT Submarine Telecom |
| Digital Imaging Tech |
KT Submarine and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT Submarine and Digital Imaging
The main advantage of trading using opposite KT Submarine and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT Submarine position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.| KT Submarine vs. Samsung Electronics Co | KT Submarine vs. Samsung Electronics Co | KT Submarine vs. SK Hynix | KT Submarine vs. POSCO Holdings |
| Digital Imaging vs. SK Hynix | Digital Imaging vs. People Technology | Digital Imaging vs. Hana Materials | Digital Imaging vs. SIMMTECH 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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