Correlation Between Consolidated Communications and KT

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

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

Diversification Opportunities for Consolidated Communications and KT

0.55

Correlation Coefficient

Consolidated Communications  KT

Very weak diversification

The 3 months correlation between Consolidated and KT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications i.e., Consolidated Communications and KT go up and down completely randomly.

Pair Corralation between Consolidated Communications and KT

Given the investment horizon of 90 days Consolidated Communications is expected to generate 9.5 times less return on investment than KT. But when comparing it to its historical volatility, Consolidated Communications is 6.5 times less risky than KT. It trades about 0.13 of its potential returns per unit of risk. KT Corporation is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,472  in KT Corporation on August 31, 2024 and sell it today you would earn a total of  357.00  from holding KT Corporation or generate 24.25% return on investment over 90 days.

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

Consolidated Communications  vs.  KT Corp.

Consolidated Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Consolidated Communications is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

KT Corporation

Risk-Adjusted Performance

14 of 100

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. In spite of comparatively inconsistent basic indicators, KT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consolidated Communications and KT

The main advantage of trading using opposite Consolidated Communications and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications 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 Consolidated Communications 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.