Correlation Between SBI Investment and KTB Investment

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

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

Diversification Opportunities for SBI Investment and KTB Investment

0.0

Correlation Coefficient

SBI Investment  KTB Investment

Pay attention - limited upside

The 3 months correlation between SBI and KTB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA 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 SBI Investment 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 SBI Investment KOREA 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 SBI Investment i.e., SBI Investment and KTB Investment go up and down completely randomly.

Pair Corralation between SBI Investment and KTB Investment

Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the KTB Investment. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 1.65 times less risky than KTB Investment. The stock trades about -0.01 of its potential returns per unit of risk. The KTB Investment Securities is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  257,000  in KTB Investment Securities on October 5, 2024 and sell it today you would earn a total of  57,500  from holding KTB Investment Securities or generate 22.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SBI Investment KOREA  vs.  KTB Investment Securities

SBI Investment KOREA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

KTB Investment Securities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 3 (%) 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 February 2025.

Pair Trading with SBI Investment and KTB Investment

The main advantage of trading using opposite SBI Investment and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment 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 SBI Investment KOREA 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.