Correlation Between Kyeryong Construction and KT

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Can any of the company-specific risk be diversified away by investing in both Kyeryong Construction and KT 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 Kyeryong Construction and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kyeryong Construction Industrial and KT Corporation, you can compare the effects of market volatilities on Kyeryong Construction and KT 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 Kyeryong Construction with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyeryong Construction and KT.

Diversification Opportunities for Kyeryong Construction and KT

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Kyeryong and KT is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kyeryong Construction Industri and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Kyeryong Construction 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 Kyeryong Construction Industrial are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Kyeryong Construction i.e., Kyeryong Construction and KT go up and down completely randomly.

Pair Corralation between Kyeryong Construction and KT

Assuming the 90 days trading horizon Kyeryong Construction Industrial is expected to under-perform the KT. But the stock apears to be less risky and, when comparing its historical volatility, Kyeryong Construction Industrial is 1.14 times less risky than KT. The stock trades about -0.01 of its potential returns per unit of risk. The KT Corporation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,044,722  in KT Corporation on September 23, 2024 and sell it today you would earn a total of  1,425,278  from holding KT Corporation or generate 46.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kyeryong Construction Industri  vs.  KT Corp.

 Performance 
       Timeline  
Kyeryong Construction 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kyeryong Construction Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
KT Corporation 

Risk-Adjusted Performance

5 of 100

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

Kyeryong Construction and KT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kyeryong Construction and KT

The main advantage of trading using opposite Kyeryong Construction and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyeryong Construction position performs unexpectedly, KT 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 KT will offset losses from the drop in KT's long position.
The idea behind Kyeryong Construction Industrial and KT Corporation 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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