Correlation Between KT and Gogo

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

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

Diversification Opportunities for KT and Gogo

0.53

Correlation Coefficient

KT  Gogo

Very weak diversification

The 3 months correlation between KT and Gogo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Gogo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gogo Inc and KT 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 Corporation are associated (or correlated) with Gogo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gogo Inc has no effect on the direction of KT i.e., KT and Gogo go up and down completely randomly.

Pair Corralation between KT and Gogo

Allowing for the 90-day total investment horizon KT Corporation is expected to generate 0.72 times more return on investment than Gogo. However, KT Corporation is 1.38 times less risky than Gogo. It trades about 0.15 of its potential returns per unit of risk. Gogo Inc is currently generating about 0.08 per unit of risk. If you would invest  1,520  in KT Corporation on September 16, 2024 and sell it today you would earn a total of  104.00  from holding KT Corporation or generate 6.84% return on investment over 90 days.

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

KT Corp.  vs.  Gogo Inc

KT Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Gogo Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gogo Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Gogo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KT and Gogo

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

The idea behind KT Corporation and Gogo Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.