Correlation Between SK Telecom and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on SK Telecom and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Industrial Bank.
Diversification Opportunities for SK Telecom and Industrial Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 017670 and Industrial is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of SK Telecom i.e., SK Telecom and Industrial Bank go up and down completely randomly.
Pair Corralation between SK Telecom and Industrial Bank
Assuming the 90 days trading horizon SK Telecom is expected to generate 1.33 times less return on investment than Industrial Bank. But when comparing it to its historical volatility, SK Telecom Co is 1.12 times less risky than Industrial Bank. It trades about 0.06 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 986,676 in Industrial Bank on October 17, 2024 and sell it today you would earn a total of 482,324 from holding Industrial Bank or generate 48.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co vs. Industrial Bank
Performance |
| Timeline |
| SK Telecom |
| Industrial Bank |
SK Telecom and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Industrial Bank
The main advantage of trading using opposite SK Telecom and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| SK Telecom vs. Daishin Information Communications | SK Telecom vs. Nice Information Telecommunication | SK Telecom vs. Lotte Data Communication | SK Telecom vs. Samhyun Steel Co |
| Industrial Bank vs. KT Submarine Telecom | Industrial Bank vs. SK Telecom Co | Industrial Bank vs. Daishin Information Communications | Industrial Bank vs. Vissem Electronics 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 CEOs Directory module to screen CEOs from public companies around the world.
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