If' I'm understanding you correctly, they're both correct, depending on what question you ask.
If you have two bodies moving away from each other, you will have some relativistic doppler shift between them, which you call K^(-1).
Let t=0 be the instant at which the bodies cross. Then a radar signal emitted from one of the bodies at time T will be received at time Lt, where L = 1/K is a number greater than 1. If it's reflected or retransmitted, it will arrive back at the original observer at time L^2 T
Using the principles of radar, considering the frame of either one of the bodies, we can conclude that at the midpoint of T and (1+L^2)T, i.e at time (1+L^2)/2 the distance was 1/2 the total round trip propagation time times c, i.e. c*(L^2 -1)/2.
This implies v/c = (L^2-1)/(L^2+1), or L = sqrt(c+v)/sqrt(c-v), which, when you consider that L = 1/K, is equivalent to your equation for K.
So, K and L gives the ratio of "time of reception" to "time of transmission", the doppler shift. That's what you'd actually perceive directly.
If you consider a frame in which one body is at rest, you can conclude that time (L^2-1)/2 on the body at rest must be radar-simultaneous with time L on the moving body.
Working this out, you'll see this is your second equation. It's about what you compute from what you actually directly see (the doppler shift) - using the einstein convention, in the frame of one of the observers , what time on the moving observer is simultaneous with 1 unit on the stationary observer. This is usually called the relativistic time dilation.
So K is the relativistic doppler shift, and your other equation is the relativistic time dilation.