Correlation Between Daejoo Electronic and KT
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and KT 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 Daejoo Electronic and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejoo Electronic Materials and KT Corporation, you can compare the effects of market volatilities on Daejoo Electronic and KT 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 Daejoo Electronic with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and KT.
Diversification Opportunities for Daejoo Electronic and KT
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daejoo and KT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Daejoo Electronic 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 Daejoo Electronic Materials are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and KT go up and down completely randomly.
Pair Corralation between Daejoo Electronic and KT
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the KT. In addition to that, Daejoo Electronic is 1.74 times more volatile than KT Corporation. It trades about -0.07 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.06 per unit of volatility. If you would invest 4,350,000 in KT Corporation on September 13, 2024 and sell it today you would earn a total of 110,000 from holding KT Corporation or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. KT Corp.
Performance |
| Timeline |
| Daejoo Electronic |
| KT Corporation |
Daejoo Electronic and KT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and KT
The main advantage of trading using opposite Daejoo Electronic and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, KT 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 KT will offset losses from the drop in KT's long position.| Daejoo Electronic vs. Cube Entertainment | Daejoo Electronic vs. Dreamus Company | Daejoo Electronic vs. LG Energy Solution | Daejoo Electronic vs. Dongwon System |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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