Correlation Between KTBST Mixed and LH Hotel

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

By analyzing existing cross correlation between KTBST Mixed Leasehold and LH Hotel Leasehold, you can compare the effects of market volatilities on KTBST Mixed and LH Hotel 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 KTBST Mixed with a short position of LH Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTBST Mixed and LH Hotel.

Diversification Opportunities for KTBST Mixed and LH Hotel

0.4

Correlation Coefficient

KTBST Mixed  LH Hotel

Very weak diversification

The 3 months correlation between KTBST and LHHOTEL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KTBST Mixed Leasehold and LH Hotel Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Hotel Leasehold and KTBST Mixed 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 KTBST Mixed Leasehold are associated (or correlated) with LH Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Hotel Leasehold has no effect on the direction of KTBST Mixed i.e., KTBST Mixed and LH Hotel go up and down completely randomly.

Pair Corralation between KTBST Mixed and LH Hotel

Assuming the 90 days trading horizon KTBST Mixed is expected to generate 8.08 times less return on investment than LH Hotel. But when comparing it to its historical volatility, KTBST Mixed Leasehold is 1.13 times less risky than LH Hotel. It trades about 0.01 of its potential returns per unit of risk. LH Hotel Leasehold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,277  in LH Hotel Leasehold on September 14, 2024 and sell it today you would earn a total of  63.00  from holding LH Hotel Leasehold or generate 4.93% return on investment over 90 days.

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

KTBST Mixed Leasehold  vs.  LH Hotel Leasehold

KTBST Mixed Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KTBST Mixed Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, KTBST Mixed is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

LH Hotel Leasehold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LH Hotel Leasehold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, LH Hotel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with KTBST Mixed and LH Hotel

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

The idea behind KTBST Mixed Leasehold and LH Hotel Leasehold 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 Anywhere module to track or share privately all of your investments from the convenience of any device.