Correlation Between KTB Investment and Sungwoo Electronics

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

By analyzing existing cross correlation between KTB Investment Securities and Sungwoo Electronics Co, you can compare the effects of market volatilities on KTB Investment and Sungwoo Electronics 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 KTB Investment with a short position of Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTB Investment and Sungwoo Electronics.

Diversification Opportunities for KTB Investment and Sungwoo Electronics

0.39

Correlation Coefficient

KTB Investment  Sungwoo Electronics

Weak diversification

The 3 months correlation between KTB and Sungwoo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics and KTB Investment 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 KTB Investment Securities are associated (or correlated) with Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of KTB Investment i.e., KTB Investment and Sungwoo Electronics go up and down completely randomly.

Pair Corralation between KTB Investment and Sungwoo Electronics

Assuming the 90 days trading horizon KTB Investment Securities is expected to under-perform the Sungwoo Electronics. But the stock apears to be less risky and, when comparing its historical volatility, KTB Investment Securities is 2.15 times less risky than Sungwoo Electronics. The stock trades about -0.17 of its potential returns per unit of risk. The Sungwoo Electronics Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  387,000  in Sungwoo Electronics Co on September 16, 2024 and sell it today you would lose (42,000) from holding Sungwoo Electronics Co or give up 10.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KTB Investment Securities  vs.  Sungwoo Electronics Co

KTB Investment Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KTB Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sungwoo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungwoo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KTB Investment and Sungwoo Electronics

The main advantage of trading using opposite KTB Investment and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KTB Investment position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' long position.

The idea behind KTB Investment Securities and Sungwoo Electronics Co 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.