Correlation Between InterDigital and KT

Can any of the company-specific risk be diversified away by investing in both InterDigital 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 InterDigital and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between InterDigital and KT Corporation, you can compare the effects of market volatilities on InterDigital 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 InterDigital with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterDigital and KT.

Diversification Opportunities for InterDigital and KT

0.45

Correlation Coefficient

InterDigital  KT

Very weak diversification

The 3 months correlation between InterDigital and KT is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding InterDigital and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and InterDigital 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 InterDigital 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 InterDigital i.e., InterDigital and KT go up and down completely randomly.

Pair Corralation between InterDigital and KT

Given the investment horizon of 90 days InterDigital is expected to generate 0.74 times more return on investment than KT. However, InterDigital is 1.35 times less risky than KT. It trades about 0.69 of its potential returns per unit of risk. KT Corporation is currently generating about 0.3 per unit of risk. If you would invest  10,286  in InterDigital on March 3, 2024 and sell it today you would earn a total of  1,101  from holding InterDigital or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

InterDigital  vs.  KT Corp.

InterDigital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InterDigital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, InterDigital may actually be approaching a critical reversion point that can send shares even higher in July 2024.

KT Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, KT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with InterDigital and KT

The main advantage of trading using opposite InterDigital and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterDigital 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.

The idea behind InterDigital and KT Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 CEOs Directory module to screen CEOs from public companies around the world.