Correlation Between Hellenic Telecommunicatio and KDDI Corp

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

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

Diversification Opportunities for Hellenic Telecommunicatio and KDDI Corp

-0.14

Correlation Coefficient

Hellenic Telecommunicatio  KDDI Corp

Good diversification

The 3 months correlation between Hellenic and KDDI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hellenic Telecommunications Or and KDDI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDDI Corp and Hellenic Telecommunicatio 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 Hellenic Telecommunications Org are associated (or correlated) with KDDI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDDI Corp has no effect on the direction of Hellenic Telecommunicatio i.e., Hellenic Telecommunicatio and KDDI Corp go up and down completely randomly.

Pair Corralation between Hellenic Telecommunicatio and KDDI Corp

Assuming the 90 days horizon Hellenic Telecommunicatio is expected to generate 4.22 times less return on investment than KDDI Corp. But when comparing it to its historical volatility, Hellenic Telecommunications Org is 1.88 times less risky than KDDI Corp. It trades about 0.04 of its potential returns per unit of risk. KDDI Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,000  in KDDI Corp on December 20, 2024 and sell it today you would earn a total of  595.00  from holding KDDI Corp or generate 19.83% return on investment over 90 days.

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

Hellenic Telecommunications Or  vs.  KDDI Corp

Hellenic Telecommunicatio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hellenic Telecommunications Org are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Hellenic Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KDDI Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KDDI Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, KDDI Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hellenic Telecommunicatio and KDDI Corp

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

The idea behind Hellenic Telecommunications Org and KDDI Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.