Correlation Between Proximus and KT

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

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

Diversification Opportunities for Proximus and KT

0.21

Correlation Coefficient

Proximus  KT

Modest diversification

The 3 months correlation between Proximus and KT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Proximus NV ADR and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Proximus 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 Proximus NV ADR 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 Proximus i.e., Proximus and KT go up and down completely randomly.

Pair Corralation between Proximus and KT

Assuming the 90 days horizon Proximus NV ADR is expected to generate 4.44 times more return on investment than KT. However, Proximus is 4.44 times more volatile than KT Corporation. It trades about 0.12 of its potential returns per unit of risk. KT Corporation is currently generating about 0.04 per unit of risk. If you would invest  103.00  in Proximus NV ADR on November 19, 2024 and sell it today you would earn a total of  11.00  from holding Proximus NV ADR or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Proximus NV ADR  vs.  KT Corp.

Proximus NV ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Proximus NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KT Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, KT may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Proximus and KT

The main advantage of trading using opposite Proximus and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proximus 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 Proximus NV ADR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.