Correlation Between SK Telecom and TAEYANG
Can any of the company-specific risk be diversified away by investing in both SK Telecom and TAEYANG 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 TAEYANG 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 TAEYANG, you can compare the effects of market volatilities on SK Telecom and TAEYANG 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 TAEYANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and TAEYANG.
Diversification Opportunities for SK Telecom and TAEYANG
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 017670 and TAEYANG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and TAEYANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAEYANG 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 TAEYANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAEYANG has no effect on the direction of SK Telecom i.e., SK Telecom and TAEYANG go up and down completely randomly.
Pair Corralation between SK Telecom and TAEYANG
Assuming the 90 days trading horizon SK Telecom Co is expected to generate 0.96 times more return on investment than TAEYANG. However, SK Telecom Co is 1.04 times less risky than TAEYANG. It trades about 0.06 of its potential returns per unit of risk. TAEYANG is currently generating about -0.02 per unit of risk. If you would invest 4,095,636 in SK Telecom Co on October 16, 2024 and sell it today you would earn a total of 1,504,364 from holding SK Telecom Co or generate 36.73% 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. TAEYANG
Performance |
Timeline |
SK Telecom |
TAEYANG |
SK Telecom and TAEYANG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK Telecom and TAEYANG
The main advantage of trading using opposite SK Telecom and TAEYANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, TAEYANG 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 TAEYANG will offset losses from the drop in TAEYANG's long position.SK Telecom vs. Iljin Display | SK Telecom vs. Grand Korea Leisure | SK Telecom vs. Korea Shipbuilding Offshore | SK Telecom vs. Daiyang Metal Co |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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