Correlation Between KT Submarine and SAMG Entertainment

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

Diversification Opportunities for KT Submarine and SAMG Entertainment

0.8

Correlation Coefficient

KT Submarine  SAMG Entertainment

Very poor diversification

The 3 months correlation between 060370 and SAMG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and SAMG Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMG Entertainment 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 SAMG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMG Entertainment has no effect on the direction of KT Submarine i.e., KT Submarine and SAMG Entertainment go up and down completely randomly.

Pair Corralation between KT Submarine and SAMG Entertainment

Assuming the 90 days trading horizon KT Submarine Telecom is expected to generate 0.89 times more return on investment than SAMG Entertainment. However, KT Submarine Telecom is 1.13 times less risky than SAMG Entertainment. It trades about 0.08 of its potential returns per unit of risk. SAMG Entertainment Co is currently generating about -0.05 per unit of risk. If you would invest  537,000  in KT Submarine Telecom on October 10, 2024 and sell it today you would earn a total of  1,035,000  from holding KT Submarine Telecom or generate 192.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.81%
Values	Daily Returns

KT Submarine Telecom  vs.  SAMG Entertainment 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.

SAMG Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMG Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KT Submarine and SAMG Entertainment

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

The idea behind KT Submarine Telecom and SAMG Entertainment 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.