Correlation Between ECSTELECOM and Kuk Young

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

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

Diversification Opportunities for ECSTELECOM and Kuk Young

0.43

Correlation Coefficient

ECSTELECOM  Kuk Young

Very weak diversification

The 3 months correlation between ECSTELECOM and Kuk is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and Kuk Young GM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuk Young GM and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with Kuk Young. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuk Young GM has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and Kuk Young go up and down completely randomly.

Pair Corralation between ECSTELECOM and Kuk Young

Assuming the 90 days trading horizon ECSTELECOM is expected to generate 7.94 times less return on investment than Kuk Young. But when comparing it to its historical volatility, ECSTELECOM Co is 5.24 times less risky than Kuk Young. It trades about 0.05 of its potential returns per unit of risk. Kuk Young GM is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  185,000  in Kuk Young GM on September 15, 2024 and sell it today you would earn a total of  39,500  from holding Kuk Young GM or generate 21.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

ECSTELECOM Co  vs.  Kuk Young GM

ECSTELECOM

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ECSTELECOM Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ECSTELECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kuk Young GM

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kuk Young GM are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuk Young sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECSTELECOM and Kuk Young

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

The idea behind ECSTELECOM Co and Kuk Young GM 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.