Correlation Between Lotte Chilsung and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and SK Telecom 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 Lotte Chilsung and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chilsung Beverage and SK Telecom Co, you can compare the effects of market volatilities on Lotte Chilsung and SK Telecom 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 Lotte Chilsung with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and SK Telecom.
Diversification Opportunities for Lotte Chilsung and SK Telecom
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotte and 017670 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Lotte Chilsung 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 Lotte Chilsung Beverage are associated (or correlated) with SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and SK Telecom go up and down completely randomly.
Pair Corralation between Lotte Chilsung and SK Telecom
Assuming the 90 days trading horizon Lotte Chilsung is expected to generate 11.82 times less return on investment than SK Telecom. In addition to that, Lotte Chilsung is 1.19 times more volatile than SK Telecom Co. It trades about 0.02 of its total potential returns per unit of risk. SK Telecom Co is currently generating about 0.24 per unit of volatility. If you would invest 5,700,000 in SK Telecom Co on September 2, 2024 and sell it today you would earn a total of 440,000 from holding SK Telecom Co or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. SK Telecom Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| SK Telecom |
Lotte Chilsung and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and SK Telecom
The main advantage of trading using opposite Lotte Chilsung and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, SK Telecom 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 SK Telecom will offset losses from the drop in SK Telecom's long position.| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech Co |
| SK Telecom vs. AfreecaTV Co | SK Telecom vs. Seegene | SK Telecom vs. SS TECH | SK Telecom vs. Busan Industrial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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