Correlation Between Daou Technology and KT Hitel

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

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

Diversification Opportunities for Daou Technology and KT Hitel

0.64

Correlation Coefficient

Daou Technology  KT Hitel

Poor diversification

The 3 months correlation between Daou and 036030 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel and Daou Technology 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 Daou Technology are associated (or correlated) with KT Hitel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Hitel has no effect on the direction of Daou Technology i.e., Daou Technology and KT Hitel go up and down completely randomly.

Pair Corralation between Daou Technology and KT Hitel

Assuming the 90 days trading horizon Daou Technology is expected to generate 1.5 times more return on investment than KT Hitel. However, Daou Technology is 1.5 times more volatile than KT Hitel. It trades about 0.18 of its potential returns per unit of risk. KT Hitel is currently generating about 0.05 per unit of risk. If you would invest  1,794,000  in Daou Technology on December 23, 2024 and sell it today you would earn a total of  366,000  from holding Daou Technology or generate 20.4% return on investment over 90 days.

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

Daou Technology  vs.  KT Hitel

Daou Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daou Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daou Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

KT Hitel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KT Hitel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KT Hitel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daou Technology and KT Hitel

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

The idea behind Daou Technology and KT Hitel 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.