Correlation Between KT Submarine and ITM Semiconductor

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

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

Diversification Opportunities for KT Submarine and ITM Semiconductor

0.85

Correlation Coefficient

KT Submarine  ITM Semiconductor

Very poor diversification

The 3 months correlation between 060370 and ITM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor and KT Submarine 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 Submarine Telecom are associated (or correlated) with ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of KT Submarine i.e., KT Submarine and ITM Semiconductor go up and down completely randomly.

Pair Corralation between KT Submarine and ITM Semiconductor

Assuming the 90 days trading horizon KT Submarine Telecom is expected to generate 1.71 times more return on investment than ITM Semiconductor. However, KT Submarine is 1.71 times more volatile than ITM Semiconductor Co. It trades about -0.09 of its potential returns per unit of risk. ITM Semiconductor Co is currently generating about -0.33 per unit of risk. If you would invest  1,882,000  in KT Submarine Telecom on September 22, 2024 and sell it today you would lose (432,000) from holding KT Submarine Telecom or give up 22.95% of portfolio value over 90 days.

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

KT Submarine Telecom  vs.  ITM Semiconductor Co

KT Submarine Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Submarine Telecom 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.

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor 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.

Pair Trading with KT Submarine and ITM Semiconductor

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

The idea behind KT Submarine Telecom and ITM Semiconductor 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.