Correlation Between KT and TS Investment

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

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

Diversification Opportunities for KT and TS Investment

-0.7

Correlation Coefficient

KT  TS Investment

Excellent diversification

The 3 months correlation between KT and 246690 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and TS Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TS Investment Corp 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 TS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TS Investment Corp has no effect on the direction of KT i.e., KT and TS Investment go up and down completely randomly.

Pair Corralation between KT and TS Investment

Assuming the 90 days trading horizon KT Corporation is expected to generate 1.28 times more return on investment than TS Investment. However, KT is 1.28 times more volatile than TS Investment Corp. It trades about 0.19 of its potential returns per unit of risk. TS Investment Corp is currently generating about -0.19 per unit of risk. If you would invest  3,932,048  in KT Corporation on September 4, 2024 and sell it today you would earn a total of  967,952  from holding KT Corporation or generate 24.62% return on investment over 90 days.

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

KT Corp.  vs.  TS Investment Corp

KT Corporation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT sustained solid returns over the last few months and may actually be approaching a breakup point.

TS Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TS Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KT and TS Investment

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

The idea behind KT Corporation and TS Investment Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.