Correlation Between Veeco Instruments and KT
Can any of the company-specific risk be diversified away by investing in both Veeco Instruments 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 Veeco Instruments and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veeco Instruments and KT Corporation, you can compare the effects of market volatilities on Veeco Instruments 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 Veeco Instruments with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and KT.
Diversification Opportunities for Veeco Instruments and KT
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Veeco and KT is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments i.e., Veeco Instruments and KT go up and down completely randomly.
Pair Corralation between Veeco Instruments and KT
Given the investment horizon of 90 days Veeco Instruments is expected to generate 1.62 times more return on investment than KT. However, Veeco Instruments is 1.62 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 -0.25 per unit of risk. If you would invest 3,570 in Veeco Instruments on January 31, 2024 and sell it today you would earn a total of 15.00 from holding Veeco Instruments or generate 0.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Veeco Instruments vs. KT Corp.
Performance |
Timeline |
Veeco Instruments |
KT Corporation |
Veeco Instruments and KT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Veeco Instruments and KT
The main advantage of trading using opposite Veeco Instruments and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments 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 Veeco Instruments 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.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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