Correlation Between Telecom Italia and KT

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

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

Diversification Opportunities for Telecom Italia and KT

0.0

Correlation Coefficient

Telecom Italia  KT

Pay attention - limited upside

The 3 months correlation between Telecom and KT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Telecom Italia 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 Telecom Italia SpA 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 Telecom Italia i.e., Telecom Italia and KT go up and down completely randomly.

Pair Corralation between Telecom Italia and KT

If you would invest  1,614  in KT Corporation on October 25, 2024 and sell it today you would earn a total of  126.00  from holding KT Corporation or generate 7.81% return on investment over 90 days.

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

Telecom Italia SpA  vs.  KT Corp.

Telecom Italia SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telecom Italia SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Telecom Italia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KT Corporation

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 7 (%) 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 February 2025.

Pair Trading with Telecom Italia and KT

The main advantage of trading using opposite Telecom Italia and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia 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 Telecom Italia SpA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.