Correlation Between KDDI Corp and Telefnica
Can any of the company-specific risk be diversified away by investing in both KDDI Corp and Telefnica 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 Telefnica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KDDI Corp and Telefnica SA, you can compare the effects of market volatilities on KDDI Corp and Telefnica 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 Telefnica. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDDI Corp and Telefnica.
Diversification Opportunities for KDDI Corp and Telefnica
Significant diversification
The 3 months correlation between KDDI and Telefnica is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KDDI Corp and Telefnica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica SA 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 Telefnica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica SA has no effect on the direction of KDDI Corp i.e., KDDI Corp and Telefnica go up and down completely randomly.
Pair Corralation between KDDI Corp and Telefnica
Assuming the 90 days horizon KDDI Corp is expected to generate 1.87 times less return on investment than Telefnica. But when comparing it to its historical volatility, KDDI Corp is 1.2 times less risky than Telefnica. It trades about 0.03 of its potential returns per unit of risk. Telefnica SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 292.00 in Telefnica SA on August 28, 2024 and sell it today you would earn a total of 176.00 from holding Telefnica SA or generate 60.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.47% |
| Values | Daily Returns |
KDDI Corp vs. Telefnica SA
Performance |
| Timeline |
| KDDI Corp |
| Telefnica SA |
KDDI Corp and Telefnica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KDDI Corp and Telefnica
The main advantage of trading using opposite KDDI Corp and Telefnica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDDI Corp position performs unexpectedly, Telefnica 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 Telefnica will offset losses from the drop in Telefnica'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 |
| Telefnica vs. KDDI Corp | Telefnica vs. Amrica Mvil, SAB | Telefnica vs. ATT Inc | Telefnica 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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