Correlation Between Telefonica and KT
Can any of the company-specific risk be diversified away by investing in both Telefonica and KT 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 Telefonica and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica SA ADR and KT Corporation, you can compare the effects of market volatilities on Telefonica and KT 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 Telefonica with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and KT.
Diversification Opportunities for Telefonica and KT
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telefonica and KT is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Telefonica 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 Telefonica SA ADR are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Telefonica i.e., Telefonica and KT go up and down completely randomly.
Pair Corralation between Telefonica and KT
Considering the 90-day investment horizon Telefonica SA ADR is expected to under-perform the KT. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica SA ADR is 1.81 times less risky than KT. The stock trades about -0.11 of its potential returns per unit of risk. The KT Corporation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,568 in KT Corporation on August 28, 2024 and sell it today you would earn a total of 128.00 from holding KT Corporation or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica SA ADR vs. KT Corp.
Performance |
| Timeline |
| Telefonica SA ADR |
| KT Corporation |
Telefonica and KT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and KT
The main advantage of trading using opposite Telefonica and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, KT 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 KT will offset losses from the drop in KT's long position.| Telefonica vs. Liberty Broadband Srs | Telefonica vs. Ribbon Communications | Telefonica vs. Liberty Broadband Srs | Telefonica vs. Shenandoah Telecommunications Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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