Correlation Between Deutsche Telekom and KT

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

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

Diversification Opportunities for Deutsche Telekom and KT

0.7

Correlation Coefficient

Deutsche Telekom  KT

Poor diversification

The 3 months correlation between Deutsche and KT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and KT go up and down completely randomly.

Pair Corralation between Deutsche Telekom and KT

Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 1.02 times more return on investment than KT. However, Deutsche Telekom is 1.02 times more volatile than KT Corporation. It trades about 0.06 of its potential returns per unit of risk. KT Corporation is currently generating about 0.04 per unit of risk. If you would invest  2,865  in Deutsche Telekom AG on September 12, 2024 and sell it today you would earn a total of  198.00  from holding Deutsche Telekom AG or generate 6.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Deutsche Telekom AG  vs.  KT Corp.

Deutsche Telekom

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Telekom AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Deutsche Telekom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KT Corporation

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Deutsche Telekom and KT

The main advantage of trading using opposite Deutsche Telekom and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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 Deutsche Telekom AG 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.