Correlation Between KT Submarine and IC Technology

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

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

Diversification Opportunities for KT Submarine and IC Technology

0.17

Correlation Coefficient

KT Submarine  IC Technology

Average diversification

The 3 months correlation between 060370 and 052860 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and IC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IC Technology and KT Submarine 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 Submarine Telecom are associated (or correlated) with IC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IC Technology has no effect on the direction of KT Submarine i.e., KT Submarine and IC Technology go up and down completely randomly.

Pair Corralation between KT Submarine and IC Technology

Assuming the 90 days trading horizon KT Submarine Telecom is expected to under-perform the IC Technology. But the stock apears to be less risky and, when comparing its historical volatility, KT Submarine Telecom is 1.33 times less risky than IC Technology. The stock trades about -0.02 of its potential returns per unit of risk. The IC Technology Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  170,000  in IC Technology Co on October 10, 2024 and sell it today you would earn a total of  11,400  from holding IC Technology Co or generate 6.71% return on investment over 90 days.

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

KT Submarine Telecom  vs.  IC Technology Co

KT Submarine Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Submarine Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KT Submarine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IC Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IC Technology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IC Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KT Submarine and IC Technology

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

The idea behind KT Submarine Telecom and IC Technology Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.