Correlation Between Coloray International and KT Submarine

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

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

Diversification Opportunities for Coloray International and KT Submarine

0.66

Correlation Coefficient

Coloray International  KT Submarine

Poor diversification

The 3 months correlation between Coloray and 060370 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and KT Submarine Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Submarine Telecom and Coloray International 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 Coloray International Investment are associated (or correlated) with KT Submarine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Submarine Telecom has no effect on the direction of Coloray International i.e., Coloray International and KT Submarine go up and down completely randomly.

Pair Corralation between Coloray International and KT Submarine

Assuming the 90 days trading horizon Coloray International is expected to generate 1.83 times less return on investment than KT Submarine. But when comparing it to its historical volatility, Coloray International Investment is 1.52 times less risky than KT Submarine. It trades about 0.07 of its potential returns per unit of risk. KT Submarine Telecom is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,532,000  in KT Submarine Telecom on October 25, 2024 and sell it today you would earn a total of  246,000  from holding KT Submarine Telecom or generate 16.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Coloray International Investme  vs.  KT Submarine Telecom

Coloray International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coloray International Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coloray International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

KT Submarine Telecom

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Submarine Telecom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT Submarine sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloray International and KT Submarine

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

The idea behind Coloray International Investment and KT Submarine Telecom 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.