Correlation Between Telephone and KT

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

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

Diversification Opportunities for Telephone and KT

0.38

Correlation Coefficient

Telephone  KT

Weak diversification

The 3 months correlation between Telephone and KT is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Telephone 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 Telephone and Data 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 Telephone i.e., Telephone and KT go up and down completely randomly.

Pair Corralation between Telephone and KT

Assuming the 90 days trading horizon Telephone is expected to generate 3.5 times less return on investment than KT. But when comparing it to its historical volatility, Telephone and Data is 1.15 times less risky than KT. It trades about 0.05 of its potential returns per unit of risk. KT Corporation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,562  in KT Corporation on December 28, 2024 and sell it today you would earn a total of  191.00  from holding KT Corporation or generate 12.23% return on investment over 90 days.

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

Telephone and Data  vs.  KT Corp.

Telephone and Data

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Telephone is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

KT Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 11 (%) 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 April 2025.

Pair Trading with Telephone and KT

The main advantage of trading using opposite Telephone and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telephone 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 Telephone and Data 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.