Correlation Between KT Hitel and NH SPAC

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

By analyzing existing cross correlation between KT Hitel and NH SPAC 2, you can compare the effects of market volatilities on KT Hitel and NH SPAC 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 NH SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT Hitel and NH SPAC.

Diversification Opportunities for KT Hitel and NH SPAC

-0.42

Correlation Coefficient

KT Hitel  NH SPAC

Very good diversification

The 3 months correlation between 036030 and 206640 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding KT Hitel and NH SPAC 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH SPAC 2 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 NH SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH SPAC 2 has no effect on the direction of KT Hitel i.e., KT Hitel and NH SPAC go up and down completely randomly.

Pair Corralation between KT Hitel and NH SPAC

Assuming the 90 days trading horizon KT Hitel is expected to under-perform the NH SPAC. But the stock apears to be less risky and, when comparing its historical volatility, KT Hitel is 1.08 times less risky than NH SPAC. The stock trades about 0.0 of its potential returns per unit of risk. The NH SPAC 2 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,762,000  in NH SPAC 2 on September 4, 2024 and sell it today you would lose (27,000) from holding NH SPAC 2 or give up 1.53% of portfolio value over 90 days.

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

KT Hitel  vs.  NH SPAC 2

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.

NH SPAC 2

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NH SPAC 2 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NH SPAC 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 NH SPAC

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

The idea behind KT Hitel and NH SPAC 2 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.