Correlation Between Telenor ASA and KDDI Corp
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and KDDI Corp 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 Telenor ASA and KDDI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and KDDI Corp PK, you can compare the effects of market volatilities on Telenor ASA and KDDI Corp 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 Telenor ASA with a short position of KDDI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and KDDI Corp.
Diversification Opportunities for Telenor ASA and KDDI Corp
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telenor and KDDI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and KDDI Corp PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDDI Corp PK and Telenor ASA 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 Telenor ASA are associated (or correlated) with KDDI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDDI Corp PK has no effect on the direction of Telenor ASA i.e., Telenor ASA and KDDI Corp go up and down completely randomly.
Pair Corralation between Telenor ASA and KDDI Corp
Assuming the 90 days horizon Telenor ASA is expected to generate 2.45 times more return on investment than KDDI Corp. However, Telenor ASA is 2.45 times more volatile than KDDI Corp PK. It trades about 0.03 of its potential returns per unit of risk. KDDI Corp PK is currently generating about 0.02 per unit of risk. If you would invest 1,045 in Telenor ASA on August 28, 2024 and sell it today you would earn a total of 121.00 from holding Telenor ASA or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.17% |
| Values | Daily Returns |
Telenor ASA vs. KDDI Corp PK
Performance |
| Timeline |
| Telenor ASA |
| KDDI Corp PK |
Telenor ASA and KDDI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and KDDI Corp
The main advantage of trading using opposite Telenor ASA and KDDI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, KDDI Corp 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 KDDI Corp will offset losses from the drop in KDDI Corp's long position.| Telenor ASA vs. Orange SA ADR | Telenor ASA vs. ATT Inc | Telenor ASA vs. Verizon Communications | Telenor ASA vs. MTN Group Ltd |
| KDDI Corp vs. Vodafone Group PLC | KDDI Corp vs. KDDI Corp | KDDI Corp vs. Amrica Mvil, SAB | KDDI Corp vs. ATT Inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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