Correlation Between SV Investment and KT

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

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

Diversification Opportunities for SV Investment and KT

0.33

Correlation Coefficient

SV Investment  KT

Weak diversification

The 3 months correlation between 289080 and KT is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and SV Investment 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 SV Investment 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 SV Investment i.e., SV Investment and KT go up and down completely randomly.

Pair Corralation between SV Investment and KT

Assuming the 90 days trading horizon SV Investment is expected to generate 1.6 times more return on investment than KT. However, SV Investment is 1.6 times more volatile than KT Corporation. It trades about 0.02 of its potential returns per unit of risk. KT Corporation is currently generating about -0.02 per unit of risk. If you would invest  141,500  in SV Investment on December 3, 2024 and sell it today you would earn a total of  1,000.00  from holding SV Investment or generate 0.71% return on investment over 90 days.

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

SV Investment  vs.  KT Corp.

SV Investment

Risk-Adjusted Performance

Weak

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

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 SV Investment and KT

The main advantage of trading using opposite SV Investment and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SV Investment 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 SV Investment 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.