Correlation Between SK Telecom and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Dongbu Steel 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 Dongbu Steel 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 Dongbu Steel Co, you can compare the effects of market volatilities on SK Telecom and Dongbu Steel 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 Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Dongbu Steel.
Diversification Opportunities for SK Telecom and Dongbu Steel
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 017670 and Dongbu is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel 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 Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of SK Telecom i.e., SK Telecom and Dongbu Steel go up and down completely randomly.
Pair Corralation between SK Telecom and Dongbu Steel
Assuming the 90 days trading horizon SK Telecom Co is expected to generate 0.63 times more return on investment than Dongbu Steel. However, SK Telecom Co is 1.6 times less risky than Dongbu Steel. It trades about 0.24 of its potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.03 per unit of risk. 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co vs. Dongbu Steel Co
Performance |
| Timeline |
| SK Telecom |
| Dongbu Steel |
SK Telecom and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Dongbu Steel
The main advantage of trading using opposite SK Telecom and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Dongbu Steel 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| SK Telecom vs. AfreecaTV Co | SK Telecom vs. Seegene | SK Telecom vs. SS TECH | SK Telecom vs. Busan Industrial Co |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Hyundai Steel |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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