Correlation Between KT and KDDI Corp

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

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

Diversification Opportunities for KT and KDDI Corp

0.55

Correlation Coefficient

KT  KDDI Corp

Very weak diversification

The 3 months correlation between KT and KDDI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and KDDI Corp PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDDI Corp PK 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 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 PK has no effect on the direction of KT i.e., KT and KDDI Corp go up and down completely randomly.

Pair Corralation between KT and KDDI Corp

Allowing for the 90-day total investment horizon KT Corporation is expected to generate 0.99 times more return on investment than KDDI Corp. However, KT Corporation is 1.01 times less risky than KDDI Corp. It trades about 0.14 of its potential returns per unit of risk. KDDI Corp PK is currently generating about 0.04 per unit of risk. If you would invest  1,596  in KT Corporation on December 26, 2024 and sell it today you would earn a total of  177.00  from holding KT Corporation or generate 11.09% return on investment over 90 days.

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

KT Corp.  vs.  KDDI Corp PK

KT Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, KT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KDDI Corp PK

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KDDI Corp PK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, KDDI Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KT and KDDI Corp

The main advantage of trading using opposite KT and KDDI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT 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 KT Corporation and KDDI Corp PK 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.