Correlation Between MTN Group and KT

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

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

Diversification Opportunities for MTN Group and KT

-0.44

Correlation Coefficient

MTN Group  KT

Very good diversification

The 3 months correlation between MTN and KT is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Ltd and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and MTN Group 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 MTN Group Ltd 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 MTN Group i.e., MTN Group and KT go up and down completely randomly.

Pair Corralation between MTN Group and KT

Assuming the 90 days horizon MTN Group Ltd is expected to under-perform the KT. In addition to that, MTN Group is 1.65 times more volatile than KT Corporation. It trades about -0.01 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.11 per unit of volatility. If you would invest  1,212  in KT Corporation on September 4, 2024 and sell it today you would earn a total of  591.00  from holding KT Corporation or generate 48.76% return on investment over 90 days.

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

MTN Group Ltd  vs.  KT Corp.

MTN Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite MTN Group and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN Group 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 MTN Group Ltd 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.