Correlation Between TelstraLimited and KDDI Corp

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

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

Diversification Opportunities for TelstraLimited and KDDI Corp

-0.28

Correlation Coefficient

TelstraLimited  KDDI Corp

Very good diversification

The 3 months correlation between TelstraLimited and KDDI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Telstra Limited and KDDI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDDI Corp and TelstraLimited 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 Telstra Limited 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 has no effect on the direction of TelstraLimited i.e., TelstraLimited and KDDI Corp go up and down completely randomly.

Pair Corralation between TelstraLimited and KDDI Corp

Assuming the 90 days horizon Telstra Limited is expected to generate 0.76 times more return on investment than KDDI Corp. However, Telstra Limited is 1.31 times less risky than KDDI Corp. It trades about 0.09 of its potential returns per unit of risk. KDDI Corp is currently generating about -0.06 per unit of risk. If you would invest  276.00  in Telstra Limited on May 6, 2025 and sell it today you would earn a total of  40.00  from holding Telstra Limited or generate 14.49% return on investment over 90 days.

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

Telstra Limited  vs.  KDDI Corp

Telstra Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telstra Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, TelstraLimited reported solid returns over the last few months and may actually be approaching a breakup point.

KDDI Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days KDDI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TelstraLimited and KDDI Corp

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

The idea behind Telstra Limited and KDDI Corp 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.