Correlation Between Pureun Mutual and KTB Investment

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

By analyzing existing cross correlation between Pureun Mutual Savings and KTB Investment Securities, you can compare the effects of market volatilities on Pureun Mutual and KTB Investment 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 Pureun Mutual with a short position of KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pureun Mutual and KTB Investment.

Diversification Opportunities for Pureun Mutual and KTB Investment

0.2

Correlation Coefficient

Pureun Mutual  KTB Investment

Modest diversification

The 3 months correlation between Pureun and KTB is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pureun Mutual Savings and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities and Pureun Mutual 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 Pureun Mutual Savings are associated (or correlated) with KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Pureun Mutual i.e., Pureun Mutual and KTB Investment go up and down completely randomly.

Pair Corralation between Pureun Mutual and KTB Investment

Assuming the 90 days trading horizon Pureun Mutual is expected to generate 3.92 times less return on investment than KTB Investment. In addition to that, Pureun Mutual is 1.4 times more volatile than KTB Investment Securities. It trades about 0.06 of its total potential returns per unit of risk. KTB Investment Securities is currently generating about 0.35 per unit of volatility. If you would invest  267,000  in KTB Investment Securities on September 27, 2024 and sell it today you would earn a total of  59,500  from holding KTB Investment Securities or generate 22.28% return on investment over 90 days.

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

Pureun Mutual Savings  vs.  KTB Investment Securities

Pureun Mutual Savings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pureun Mutual Savings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pureun Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KTB Investment Securities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KTB Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pureun Mutual and KTB Investment

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

The idea behind Pureun Mutual Savings and KTB Investment Securities 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.