Correlation Between KT and Hanwha Life

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

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

Diversification Opportunities for KT and Hanwha Life

0.53

Correlation Coefficient

KT  Hanwha Life

Very weak diversification

The 3 months correlation between KT and Hanwha is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Hanwha Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Life Insurance and KT 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 KT Corporation are associated (or correlated) with Hanwha Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Life Insurance has no effect on the direction of KT i.e., KT and Hanwha Life go up and down completely randomly.

Pair Corralation between KT and Hanwha Life

Assuming the 90 days trading horizon KT Corporation is expected to generate 0.73 times more return on investment than Hanwha Life. However, KT Corporation is 1.36 times less risky than Hanwha Life. It trades about 0.12 of its potential returns per unit of risk. Hanwha Life Insurance is currently generating about 0.02 per unit of risk. If you would invest  4,522,445  in KT Corporation on December 23, 2024 and sell it today you would earn a total of  452,555  from holding KT Corporation or generate 10.01% return on investment over 90 days.

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

KT Corp.  vs.  Hanwha Life Insurance

KT Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 9 (%) 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 April 2025.

Hanwha Life Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha Life Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hanwha Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KT and Hanwha Life

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

The idea behind KT Corporation and Hanwha Life Insurance 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.