Correlation Between Daewoo SBI and KTB Investment

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

By analyzing existing cross correlation between Daewoo SBI SPAC and KTB Investment Securities, you can compare the effects of market volatilities on Daewoo SBI and KTB Investment 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 Daewoo SBI with a short position of KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and KTB Investment.

Diversification Opportunities for Daewoo SBI and KTB Investment

0.56

Correlation Coefficient

Daewoo SBI  KTB Investment

Very weak diversification

The 3 months correlation between Daewoo and KTB is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and KTB Investment go up and down completely randomly.

Pair Corralation between Daewoo SBI and KTB Investment

Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 1.75 times more return on investment than KTB Investment. However, Daewoo SBI is 1.75 times more volatile than KTB Investment Securities. It trades about 0.18 of its potential returns per unit of risk. KTB Investment Securities is currently generating about 0.28 per unit of risk. If you would invest  240,000  in Daewoo SBI SPAC on September 22, 2024 and sell it today you would earn a total of  40,000  from holding Daewoo SBI SPAC or generate 16.67% return on investment over 90 days.

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

Daewoo SBI SPAC  vs.  KTB Investment Securities

Daewoo SBI SPAC

Risk-Adjusted Performance

0 of 100

Very Weak

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

KTB Investment Securities

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KTB Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daewoo SBI and KTB Investment

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

The idea behind Daewoo SBI SPAC and KTB Investment Securities 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.