Correlation Between ECSTELECOM and KT Submarine

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

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

Diversification Opportunities for ECSTELECOM and KT Submarine

0.29

Correlation Coefficient

ECSTELECOM  KT Submarine

Modest diversification

The 3 months correlation between ECSTELECOM and 060370 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and KT Submarine Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Submarine Telecom and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with KT Submarine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Submarine Telecom has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and KT Submarine go up and down completely randomly.

Pair Corralation between ECSTELECOM and KT Submarine

Assuming the 90 days trading horizon ECSTELECOM Co is expected to under-perform the KT Submarine. But the stock apears to be less risky and, when comparing its historical volatility, ECSTELECOM Co is 1.75 times less risky than KT Submarine. The stock trades about -0.23 of its potential returns per unit of risk. The KT Submarine Telecom is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,478,000  in KT Submarine Telecom on October 23, 2024 and sell it today you would earn a total of  285,000  from holding KT Submarine Telecom or generate 19.28% return on investment over 90 days.

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

ECSTELECOM Co  vs.  KT Submarine Telecom

ECSTELECOM

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECSTELECOM Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ECSTELECOM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

KT Submarine Telecom

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Submarine Telecom are ranked lower than 4 (%) 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.

Pair Trading with ECSTELECOM and KT Submarine

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

The idea behind ECSTELECOM Co and KT Submarine Telecom 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.