Correlation Between KDDI Corp and KT

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

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

Diversification Opportunities for KDDI Corp and KT

-0.12

Correlation Coefficient

KDDI Corp  KT

Good diversification

The 3 months correlation between KDDI and KT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding KDDI Corp PK and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and KDDI Corp 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 KDDI Corp PK 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 KDDI Corp i.e., KDDI Corp and KT go up and down completely randomly.

Pair Corralation between KDDI Corp and KT

Assuming the 90 days horizon KDDI Corp PK is expected to under-perform the KT. But the pink sheet apears to be less risky and, when comparing its historical volatility, KDDI Corp PK is 1.67 times less risky than KT. The pink sheet trades about 0.0 of its potential returns per unit of risk. The KT Corporation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,480  in KT Corporation on September 4, 2024 and sell it today you would earn a total of  331.00  from holding KT Corporation or generate 22.36% return on investment over 90 days.

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

KDDI Corp PK  vs.  KT Corp.

KDDI Corp PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KDDI Corp PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, KDDI Corp 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, KT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KDDI Corp and KT

The main advantage of trading using opposite KDDI Corp and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDDI Corp 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 KDDI Corp PK 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.