Correlation Between AeroSpace Technology and KT

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

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

Diversification Opportunities for AeroSpace Technology and KT

-0.72

Correlation Coefficient

AeroSpace Technology  KT

Pay attention - limited upside

The 3 months correlation between AeroSpace and KT is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AeroSpace Technology of and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and AeroSpace Technology 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 AeroSpace Technology of are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of AeroSpace Technology i.e., AeroSpace Technology and KT go up and down completely randomly.

Pair Corralation between AeroSpace Technology and KT

Assuming the 90 days trading horizon AeroSpace Technology of is expected to generate 0.96 times more return on investment than KT. However, AeroSpace Technology of is 1.05 times less risky than KT. It trades about 0.05 of its potential returns per unit of risk. KT Corporation is currently generating about -0.21 per unit of risk. If you would invest  49,800  in AeroSpace Technology of on September 30, 2024 and sell it today you would earn a total of  800.00  from holding AeroSpace Technology of or generate 1.61% return on investment over 90 days.

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

AeroSpace Technology of  vs.  KT Corp.

AeroSpace Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AeroSpace Technology of 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.

KT Corporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AeroSpace Technology and KT

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

The idea behind AeroSpace Technology of and KT Corporation 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.