Correlation Between KT and Reading International
Can any of the company-specific risk be diversified away by investing in both KT and Reading International 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 Reading International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Reading International, you can compare the effects of market volatilities on KT and Reading International 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 Reading International. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Reading International.
Diversification Opportunities for KT and Reading International
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KT and Reading is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Reading International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reading International 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 Reading International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reading International has no effect on the direction of KT i.e., KT and Reading International go up and down completely randomly.
Pair Corralation between KT and Reading International
Allowing for the 90-day total investment horizon KT Corporation is expected to generate 0.64 times more return on investment than Reading International. However, KT Corporation is 1.57 times less risky than Reading International. It trades about 0.26 of its potential returns per unit of risk. Reading International is currently generating about 0.06 per unit of risk. If you would invest 1,581 in KT Corporation on August 31, 2024 and sell it today you would earn a total of 248.00 from holding KT Corporation or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Corp. vs. Reading International
Performance |
| Timeline |
| KT Corporation |
| Reading International |
KT and Reading International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Reading International
The main advantage of trading using opposite KT and Reading International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Reading International 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 Reading International will offset losses from the drop in Reading International's long position.The idea behind KT Corporation and Reading International 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.| Reading International vs. Roku Inc | Reading International vs. AMC Entertainment Holdings | Reading International vs. Paramount Global Class | Reading International vs. Warner Bros Discovery |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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