Correlation Between Vodafone Group and KT

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

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

Diversification Opportunities for Vodafone Group and KT

0.7

Correlation Coefficient

Vodafone Group  KT

Poor diversification

The 3 months correlation between Vodafone and KT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Vodafone Group 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 Vodafone Group PLC 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 Vodafone Group i.e., Vodafone Group and KT go up and down completely randomly.

Pair Corralation between Vodafone Group and KT

Considering the 90-day investment horizon Vodafone Group is expected to generate 1.1 times less return on investment than KT. In addition to that, Vodafone Group is 1.18 times more volatile than KT Corporation. It trades about 0.12 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.15 per unit of volatility. If you would invest  1,586  in KT Corporation on December 27, 2024 and sell it today you would earn a total of  199.00  from holding KT Corporation or generate 12.55% return on investment over 90 days.

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

Vodafone Group PLC  vs.  KT Corp.

Vodafone Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Vodafone Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KT Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, KT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vodafone Group and KT

The main advantage of trading using opposite Vodafone Group and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group 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 Vodafone Group PLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.