Correlation Between KDDI Corp and China TowerLimited
Can any of the company-specific risk be diversified away by investing in both KDDI Corp and China TowerLimited 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 China TowerLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KDDI Corp and China Tower, you can compare the effects of market volatilities on KDDI Corp and China TowerLimited 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 China TowerLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDDI Corp and China TowerLimited.
Diversification Opportunities for KDDI Corp and China TowerLimited
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KDDI and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KDDI Corp and China Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China TowerLimited 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 China TowerLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China TowerLimited has no effect on the direction of KDDI Corp i.e., KDDI Corp and China TowerLimited go up and down completely randomly.
Pair Corralation between KDDI Corp and China TowerLimited
Assuming the 90 days horizon KDDI Corp is expected to under-perform the China TowerLimited. But the pink sheet apears to be less risky and, when comparing its historical volatility, KDDI Corp is 1.36 times less risky than China TowerLimited. The pink sheet trades about -0.1 of its potential returns per unit of risk. The China Tower is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in China Tower on August 26, 2024 and sell it today you would earn a total of 0.00 from holding China Tower or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KDDI Corp vs. China Tower
Performance |
| Timeline |
| KDDI Corp |
| China TowerLimited |
KDDI Corp and China TowerLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KDDI Corp and China TowerLimited
The main advantage of trading using opposite KDDI Corp and China TowerLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDDI Corp position performs unexpectedly, China TowerLimited 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 China TowerLimited will offset losses from the drop in China TowerLimited'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 |
| China TowerLimited vs. Singapore Telecommunications Limited | China TowerLimited vs. Vodafone Group PLC | China TowerLimited vs. PT Indosat Tbk | China TowerLimited vs. KDDI Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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