Correlation Between NAU IB and KT

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

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

Diversification Opportunities for NAU IB and KT

-0.64

Correlation Coefficient

NAU IB  KT

Excellent diversification

The 3 months correlation between NAU and KT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NAU IB Capital and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and NAU IB 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 NAU IB Capital 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 NAU IB i.e., NAU IB and KT go up and down completely randomly.

Pair Corralation between NAU IB and KT

Assuming the 90 days trading horizon NAU IB Capital is expected to under-perform the KT. In addition to that, NAU IB is 4.07 times more volatile than KT Corporation. It trades about -0.01 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.18 per unit of volatility. If you would invest  4,339,370  in KT Corporation on December 29, 2024 and sell it today you would earn a total of  645,630  from holding KT Corporation or generate 14.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

NAU IB Capital  vs.  KT Corp.

NAU IB Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAU IB Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NAU IB 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NAU IB and KT

The main advantage of trading using opposite NAU IB and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAU IB 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 NAU IB Capital 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.