Correlation Between Daesung Private and KT

Can any of the company-specific risk be diversified away by investing in both Daesung Private 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 Daesung Private and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daesung Private Equity and KT Corporation, you can compare the effects of market volatilities on Daesung Private 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 Daesung Private with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Private and KT.

Diversification Opportunities for Daesung Private and KT

-0.35

Correlation Coefficient

Daesung Private  KT

Very good diversification

The 3 months correlation between Daesung and KT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Private Equity and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Daesung Private 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 Daesung Private Equity 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 Daesung Private i.e., Daesung Private and KT go up and down completely randomly.

Pair Corralation between Daesung Private and KT

Assuming the 90 days trading horizon Daesung Private Equity is expected to generate 2.08 times more return on investment than KT. However, Daesung Private is 2.08 times more volatile than KT Corporation. It trades about 0.09 of its potential returns per unit of risk. KT Corporation is currently generating about 0.07 per unit of risk. If you would invest  149,100  in Daesung Private Equity on September 13, 2024 and sell it today you would earn a total of  32,900  from holding Daesung Private Equity or generate 22.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Daesung Private Equity  vs.  KT Corp.

Daesung Private Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Private Equity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daesung Private sustained solid returns over the last few months and may actually be approaching a breakup point.

KT Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Daesung Private and KT

The main advantage of trading using opposite Daesung Private and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Private 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.

The idea behind Daesung Private Equity and KT Corporation 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.