Correlation Between ICD Co and KT

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

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

Diversification Opportunities for ICD Co and KT

-0.64

Correlation Coefficient

ICD Co  KT

Excellent diversification

The 3 months correlation between ICD and KT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ICD Co and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and ICD Co 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 ICD Co 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 ICD Co i.e., ICD Co and KT go up and down completely randomly.

Pair Corralation between ICD Co and KT

Assuming the 90 days trading horizon ICD Co is expected to under-perform the KT. In addition to that, ICD Co is 1.29 times more volatile than KT Corporation. It trades about -0.2 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.06 per unit of volatility. If you would invest  4,095,060  in KT Corporation on September 12, 2024 and sell it today you would earn a total of  289,940  from holding KT Corporation or generate 7.08% return on investment over 90 days.

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

ICD Co  vs.  KT Corp.

ICD Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICD Co 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.

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 ICD Co and KT

The main advantage of trading using opposite ICD Co and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD Co 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 ICD Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.