Correlation Between KG Eco and KT Hitel

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

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

Diversification Opportunities for KG Eco and KT Hitel

0.84

Correlation Coefficient

KG Eco  KT Hitel

Very poor diversification

The 3 months correlation between 151860 and 036030 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel and KG Eco 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 KG Eco Technology 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 KG Eco i.e., KG Eco and KT Hitel go up and down completely randomly.

Pair Corralation between KG Eco and KT Hitel

Assuming the 90 days trading horizon KG Eco Technology is expected to generate 1.5 times more return on investment than KT Hitel. However, KG Eco is 1.5 times more volatile than KT Hitel. It trades about -0.02 of its potential returns per unit of risk. KT Hitel is currently generating about -0.05 per unit of risk. If you would invest  1,056,758  in KG Eco Technology on October 11, 2024 and sell it today you would lose (540,758) from holding KG Eco Technology or give up 51.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

KG Eco Technology  vs.  KT Hitel

KG Eco Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

KT Hitel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Hitel 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.

Pair Trading with KG Eco and KT Hitel

The main advantage of trading using opposite KG Eco and KT Hitel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco 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 KG Eco Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.