Correlation Between KT and Marchex
Can any of the company-specific risk be diversified away by investing in both KT and Marchex 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 and Marchex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Marchex, you can compare the effects of market volatilities on KT and Marchex 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 with a short position of Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Marchex.
Diversification Opportunities for KT and Marchex
Excellent diversification
The 3 months correlation between KT and Marchex is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and KT 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 Corporation are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of KT i.e., KT and Marchex go up and down completely randomly.
Pair Corralation between KT and Marchex
Allowing for the 90-day total investment horizon KT Corporation is expected to generate 0.62 times more return on investment than Marchex. However, KT Corporation is 1.6 times less risky than Marchex. It trades about 0.11 of its potential returns per unit of risk. Marchex is currently generating about -0.01 per unit of risk. If you would invest 1,555 in KT Corporation on August 24, 2024 and sell it today you would earn a total of 79.00 from holding KT Corporation or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Corp. vs. Marchex
Performance |
| Timeline |
| KT Corporation |
| Marchex |
KT and Marchex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Marchex
The main advantage of trading using opposite KT and Marchex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Marchex 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 Marchex will offset losses from the drop in Marchex's long position.The idea behind KT Corporation and Marchex pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Marchex vs. Entravision Communications | Marchex vs. Direct Digital Holdings | Marchex vs. Cimpress NV | Marchex vs. Townsquare Media |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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