Correlation Between KT and America Movil

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

By analyzing existing cross correlation between KT Corporation and America Movil SAB, you can compare the effects of market volatilities on KT and America Movil 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 America Movil. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and America Movil.

Diversification Opportunities for KT and America Movil

-0.47

Correlation Coefficient

KT  America Movil

Very good diversification

The 3 months correlation between KT and America is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and America Movil SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Movil SAB 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 America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Movil SAB has no effect on the direction of KT i.e., KT and America Movil go up and down completely randomly.

Pair Corralation between KT and America Movil

Allowing for the 90-day total investment horizon KT Corporation is expected to generate 1.3 times more return on investment than America Movil. However, KT is 1.3 times more volatile than America Movil SAB. It trades about 0.18 of its potential returns per unit of risk. America Movil SAB is currently generating about -0.07 per unit of risk. If you would invest  1,472  in KT Corporation on September 2, 2024 and sell it today you would earn a total of  343.00  from holding KT Corporation or generate 23.3% return on investment over 90 days.

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

KT Corp.  vs.  America Movil SAB

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.

America Movil SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Movil SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KT and America Movil

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

The idea behind KT Corporation and America Movil SAB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..