Correlation Between KTB Investment and Leaders Technology

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

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

Diversification Opportunities for KTB Investment and Leaders Technology

0.54

Correlation Coefficient

KTB Investment  Leaders Technology

Very weak diversification

The 3 months correlation between KTB and Leaders is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology and KTB 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 KTB Investment Securities are associated (or correlated) with Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of KTB Investment i.e., KTB Investment and Leaders Technology go up and down completely randomly.

Pair Corralation between KTB Investment and Leaders Technology

Assuming the 90 days trading horizon KTB Investment Securities is expected to generate 0.54 times more return on investment than Leaders Technology. However, KTB Investment Securities is 1.84 times less risky than Leaders Technology. It trades about 0.08 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.14 per unit of risk. If you would invest  303,500  in KTB Investment Securities on September 28, 2024 and sell it today you would earn a total of  27,500  from holding KTB Investment Securities or generate 9.06% return on investment over 90 days.

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

KTB Investment Securities  vs.  Leaders Technology Investment

KTB Investment Securities

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 6 (%) 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 January 2025.

Leaders Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leaders Technology Investment 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 KTB Investment and Leaders Technology

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

The idea behind KTB Investment Securities and Leaders Technology Investment 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.