Correlation Between Hyunwoo Industrial and KT

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

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

Diversification Opportunities for Hyunwoo Industrial and KT

-0.67

Correlation Coefficient

Hyunwoo Industrial  KT

Excellent diversification

The 3 months correlation between Hyunwoo and KT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyunwoo Industrial Co and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Hyunwoo Industrial 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 Hyunwoo Industrial Co 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 Hyunwoo Industrial i.e., Hyunwoo Industrial and KT go up and down completely randomly.

Pair Corralation between Hyunwoo Industrial and KT

Assuming the 90 days trading horizon Hyunwoo Industrial Co is expected to under-perform the KT. In addition to that, Hyunwoo Industrial is 1.22 times more volatile than KT Corporation. It trades about -0.05 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.05 per unit of volatility. If you would invest  4,305,000  in KT Corporation on October 6, 2024 and sell it today you would earn a total of  145,000  from holding KT Corporation or generate 3.37% return on investment over 90 days.

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

Hyunwoo Industrial Co  vs.  KT Corp.

Hyunwoo Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyunwoo Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KT Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hyunwoo Industrial and KT

The main advantage of trading using opposite Hyunwoo Industrial and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyunwoo Industrial 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 Hyunwoo Industrial Co 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.