Correlation Between KT Hitel and MegaStudy

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

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

Diversification Opportunities for KT Hitel and MegaStudy

-0.31

Correlation Coefficient

KT Hitel  MegaStudy

Very good diversification

The 3 months correlation between 036030 and MegaStudy is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KT Hitel and MegaStudy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaStudy and KT Hitel 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 Hitel are associated (or correlated) with MegaStudy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaStudy has no effect on the direction of KT Hitel i.e., KT Hitel and MegaStudy go up and down completely randomly.

Pair Corralation between KT Hitel and MegaStudy

Assuming the 90 days trading horizon KT Hitel is expected to under-perform the MegaStudy. In addition to that, KT Hitel is 6.45 times more volatile than MegaStudy Co. It trades about -0.02 of its total potential returns per unit of risk. MegaStudy Co is currently generating about 0.08 per unit of volatility. If you would invest  1,123,000  in MegaStudy Co on September 22, 2024 and sell it today you would earn a total of  28,000  from holding MegaStudy Co or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

KT Hitel  vs.  MegaStudy Co

KT Hitel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Hitel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KT Hitel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MegaStudy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MegaStudy Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MegaStudy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KT Hitel and MegaStudy

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

The idea behind KT Hitel and MegaStudy 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.