Correlation Between KDDI Corp and Telefonica
Can any of the company-specific risk be diversified away by investing in both KDDI Corp and Telefonica 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 Telefonica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KDDI Corp PK and Telefonica SA ADR, you can compare the effects of market volatilities on KDDI Corp and Telefonica 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 Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDDI Corp and Telefonica.
Diversification Opportunities for KDDI Corp and Telefonica
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between KDDI and Telefonica is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding KDDI Corp PK and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR 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 PK are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of KDDI Corp i.e., KDDI Corp and Telefonica go up and down completely randomly.
Pair Corralation between KDDI Corp and Telefonica
Assuming the 90 days horizon KDDI Corp PK is expected to generate 0.66 times more return on investment than Telefonica. However, KDDI Corp PK is 1.52 times less risky than Telefonica. It trades about 0.21 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about -0.11 per unit of risk. If you would invest 1,549 in KDDI Corp PK on August 28, 2024 and sell it today you would earn a total of 63.00 from holding KDDI Corp PK or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KDDI Corp PK vs. Telefonica SA ADR
Performance |
| Timeline |
| KDDI Corp PK |
| Telefonica SA ADR |
KDDI Corp and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KDDI Corp and Telefonica
The main advantage of trading using opposite KDDI Corp and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDDI Corp position performs unexpectedly, Telefonica 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 Telefonica will offset losses from the drop in Telefonica's long position.| KDDI Corp vs. Vodafone Group PLC | KDDI Corp vs. KDDI Corp | KDDI Corp vs. Amrica Mvil, SAB | KDDI Corp vs. ATT Inc |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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