Correlation Between KT and Lumen Technologies

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

By analyzing existing cross correlation between KT Corporation and Lumen Technologies, you can compare the effects of market volatilities on KT and Lumen Technologies 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 Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Lumen Technologies.

Diversification Opportunities for KT and Lumen Technologies

-0.62

Correlation Coefficient

KT  Lumen Technologies

Excellent diversification

The 3 months correlation between KT and Lumen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies 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 Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of KT i.e., KT and Lumen Technologies go up and down completely randomly.

Pair Corralation between KT and Lumen Technologies

Allowing for the 90-day total investment horizon KT Corporation is expected to generate 0.33 times more return on investment than Lumen Technologies. However, KT Corporation is 3.04 times less risky than Lumen Technologies. It trades about 0.14 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.08 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KT Corp.  vs.  Lumen Technologies

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.

Lumen Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with KT and Lumen Technologies

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

The idea behind KT Corporation and Lumen Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.