Correlation Between KT Submarine and Dawonsys CoLtd

Can any of the company-specific risk be diversified away by investing in both KT Submarine and Dawonsys CoLtd 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 Dawonsys CoLtd 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 Dawonsys CoLtd, you can compare the effects of market volatilities on KT Submarine and Dawonsys CoLtd 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 Dawonsys CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT Submarine and Dawonsys CoLtd.

Diversification Opportunities for KT Submarine and Dawonsys CoLtd

0.02

Correlation Coefficient

KT Submarine  Dawonsys CoLtd

Significant diversification

The 3 months correlation between 060370 and Dawonsys is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and Dawonsys CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawonsys CoLtd 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 Dawonsys CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawonsys CoLtd has no effect on the direction of KT Submarine i.e., KT Submarine and Dawonsys CoLtd go up and down completely randomly.

Pair Corralation between KT Submarine and Dawonsys CoLtd

Assuming the 90 days trading horizon KT Submarine is expected to generate 3.26 times less return on investment than Dawonsys CoLtd. In addition to that, KT Submarine is 1.47 times more volatile than Dawonsys CoLtd. It trades about 0.05 of its total potential returns per unit of risk. Dawonsys CoLtd is currently generating about 0.26 per unit of volatility. If you would invest  963,000  in Dawonsys CoLtd on November 29, 2024 and sell it today you would earn a total of  124,000  from holding Dawonsys CoLtd or generate 12.88% 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.  Dawonsys CoLtd

KT Submarine Telecom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Submarine Telecom are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT Submarine sustained solid returns over the last few months and may actually be approaching a breakup point.

Dawonsys CoLtd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dawonsys CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dawonsys CoLtd may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with KT Submarine and Dawonsys CoLtd

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

The idea behind KT Submarine Telecom and Dawonsys CoLtd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.