Correlation Between KDDI Corp and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both KDDI Corp and Airtel Africa 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 KDDI Corp and Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KDDI Corp and Airtel Africa Plc, you can compare the effects of market volatilities on KDDI Corp and Airtel Africa 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 KDDI Corp with a short position of Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDDI Corp and Airtel Africa.
Diversification Opportunities for KDDI Corp and Airtel Africa
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KDDI and Airtel is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KDDI Corp and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc and KDDI Corp 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 KDDI Corp are associated (or correlated) with Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of KDDI Corp i.e., KDDI Corp and Airtel Africa go up and down completely randomly.
Pair Corralation between KDDI Corp and Airtel Africa
Assuming the 90 days horizon KDDI Corp is expected to generate 0.8 times more return on investment than Airtel Africa. However, KDDI Corp is 1.25 times less risky than Airtel Africa. It trades about -0.1 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.19 per unit of risk. If you would invest 3,225 in KDDI Corp on August 29, 2024 and sell it today you would lose (189.00) from holding KDDI Corp or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KDDI Corp vs. Airtel Africa Plc
Performance |
| Timeline |
| KDDI Corp |
| Airtel Africa Plc |
KDDI Corp and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KDDI Corp and Airtel Africa
The main advantage of trading using opposite KDDI Corp and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDDI Corp position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| KDDI Corp vs. Telefnica SA | KDDI Corp vs. Turk Telekomunikasyon AS | KDDI Corp vs. Orange SA | KDDI Corp vs. Nippon Telegraph Telephone |
| Airtel Africa vs. KDDI Corp | Airtel Africa vs. Amrica Mvil, SAB | Airtel Africa vs. ATT Inc | Airtel Africa vs. FingerMotion |
Check out your portfolio center.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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