Correlation Between HB Technology and KT Hitel

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

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

Diversification Opportunities for HB Technology and KT Hitel

0.23

Correlation Coefficient

HB Technology  KT Hitel

Modest diversification

The 3 months correlation between 078150 and 036030 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HB Technology TD and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel and HB 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 HB Technology TD are associated (or correlated) with KT Hitel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Hitel has no effect on the direction of HB Technology i.e., HB Technology and KT Hitel go up and down completely randomly.

Pair Corralation between HB Technology and KT Hitel

Assuming the 90 days trading horizon HB Technology TD is expected to generate 3.02 times more return on investment than KT Hitel. However, HB Technology is 3.02 times more volatile than KT Hitel. It trades about 0.1 of its potential returns per unit of risk. KT Hitel is currently generating about 0.07 per unit of risk. If you would invest  194,395  in HB Technology TD on December 24, 2024 and sell it today you would earn a total of  36,105  from holding HB Technology TD or generate 18.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

HB Technology TD  vs.  KT Hitel

HB Technology TD

Risk-Adjusted Performance

OK

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

KT Hitel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Hitel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KT Hitel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HB Technology and KT Hitel

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

The idea behind HB Technology TD and KT Hitel 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.