Correlation Between SK Telecom and Korean Drug
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Korean Drug 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 SK Telecom and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Telecom Co and Korean Drug Co, you can compare the effects of market volatilities on SK Telecom and Korean Drug 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 SK Telecom with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Korean Drug.
Diversification Opportunities for SK Telecom and Korean Drug
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 017670 and Korean is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and SK Telecom 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 SK Telecom Co are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of SK Telecom i.e., SK Telecom and Korean Drug go up and down completely randomly.
Pair Corralation between SK Telecom and Korean Drug
Assuming the 90 days trading horizon SK Telecom is expected to generate 1.26 times less return on investment than Korean Drug. In addition to that, SK Telecom is 1.16 times more volatile than Korean Drug Co. It trades about 0.28 of its total potential returns per unit of risk. Korean Drug Co is currently generating about 0.41 per unit of volatility. If you would invest 478,500 in Korean Drug Co on November 27, 2024 and sell it today you would earn a total of 36,500 from holding Korean Drug Co or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co vs. Korean Drug Co
Performance |
| Timeline |
| SK Telecom |
| Korean Drug |
SK Telecom and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Korean Drug
The main advantage of trading using opposite SK Telecom and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| SK Telecom vs. Worldex Industry Trading | SK Telecom vs. FoodNamoo | SK Telecom vs. Namyang Dairy | SK Telecom vs. Nh Investment And |
| Korean Drug vs. Inzi Display CoLtd | Korean Drug vs. InnoTherapy | Korean Drug vs. Hannong Chemicals | Korean Drug vs. SK Chemicals 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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