Correlation Between KT and MTN Group
Can any of the company-specific risk be diversified away by investing in both KT and MTN Group 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 KT and MTN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and MTN Group Ltd, you can compare the effects of market volatilities on KT and MTN Group 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 KT with a short position of MTN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and MTN Group.
Diversification Opportunities for KT and MTN Group
Weak diversification
The 3 months correlation between KT and MTN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and MTN Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group and KT 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 KT Corporation are associated (or correlated) with MTN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of KT i.e., KT and MTN Group go up and down completely randomly.
Pair Corralation between KT and MTN Group
Allowing for the 90-day total investment horizon KT is expected to generate 1.32 times less return on investment than MTN Group. But when comparing it to its historical volatility, KT Corporation is 1.84 times less risky than MTN Group. It trades about 0.07 of its potential returns per unit of risk. MTN Group Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 482.00 in MTN Group Ltd on November 3, 2024 and sell it today you would earn a total of 135.00 from holding MTN Group Ltd or generate 28.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
KT Corp. vs. MTN Group Ltd
Performance |
| Timeline |
| KT Corporation |
| MTN Group |
KT and MTN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and MTN Group
The main advantage of trading using opposite KT and MTN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, MTN Group 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 MTN Group will offset losses from the drop in MTN Group's long position.| KT vs. PLDT Inc ADR | KT vs. Telefonica Brasil SA | KT vs. TIM Participacoes SA | KT vs. Telkom Indonesia Tbk |
| MTN Group vs. XL Axiata Tbk | MTN Group vs. Telenor ASA ADR | MTN Group vs. KT Corporation | MTN Group vs. Vodacom Group Ltd |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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