Correlation Between KT and Pegasus Tel

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Can any of the company-specific risk be diversified away by investing in both KT and Pegasus Tel 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 KT and Pegasus Tel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Pegasus Tel, you can compare the effects of market volatilities on KT and Pegasus Tel 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 KT with a short position of Pegasus Tel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Pegasus Tel.

Diversification Opportunities for KT and Pegasus Tel

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between KT and Pegasus is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Pegasus Tel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Tel and KT 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 KT Corporation are associated (or correlated) with Pegasus Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Tel has no effect on the direction of KT i.e., KT and Pegasus Tel go up and down completely randomly.

Pair Corralation between KT and Pegasus Tel

Allowing for the 90-day total investment horizon KT Corporation is expected to under-perform the Pegasus Tel. But the stock apears to be less risky and, when comparing its historical volatility, KT Corporation is 3.52 times less risky than Pegasus Tel. The stock trades about -0.44 of its potential returns per unit of risk. The Pegasus Tel is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.13  in Pegasus Tel on September 29, 2024 and sell it today you would earn a total of  0.01  from holding Pegasus Tel or generate 7.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KT Corp.  vs.  Pegasus Tel

 Performance 
       Timeline  
KT Corporation 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Pegasus Tel 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Tel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Pegasus Tel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KT and Pegasus Tel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KT and Pegasus Tel

The main advantage of trading using opposite KT and Pegasus Tel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Pegasus Tel 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 Pegasus Tel will offset losses from the drop in Pegasus Tel's long position.
The idea behind KT Corporation and Pegasus Tel 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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