Correlation Between DYPNF CoLtd and KT

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

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

Diversification Opportunities for DYPNF CoLtd and KT

0.36

Correlation Coefficient

DYPNF CoLtd  KT

Weak diversification

The 3 months correlation between DYPNF and KT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding DYPNF CoLtd and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and DYPNF CoLtd 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 DYPNF CoLtd 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 DYPNF CoLtd i.e., DYPNF CoLtd and KT go up and down completely randomly.

Pair Corralation between DYPNF CoLtd and KT

Assuming the 90 days trading horizon DYPNF CoLtd is expected to generate 1.9 times more return on investment than KT. However, DYPNF CoLtd is 1.9 times more volatile than KT Corporation. It trades about 0.15 of its potential returns per unit of risk. KT Corporation is currently generating about -0.03 per unit of risk. If you would invest  1,136,000  in DYPNF CoLtd on December 1, 2024 and sell it today you would earn a total of  309,000  from holding DYPNF CoLtd or generate 27.2% return on investment over 90 days.

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

DYPNF CoLtd  vs.  KT Corp.

DYPNF CoLtd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DYPNF CoLtd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DYPNF CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

KT Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days KT Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DYPNF CoLtd and KT

The main advantage of trading using opposite DYPNF CoLtd and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DYPNF CoLtd 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 DYPNF CoLtd 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.