Correlation Between PURETECH HEALTH and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both PURETECH HEALTH 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 PURETECH HEALTH and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PURETECH HEALTH PLC and SK TELECOM TDADR, you can compare the effects of market volatilities on PURETECH HEALTH 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 PURETECH HEALTH with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and SK TELECOM.
Diversification Opportunities for PURETECH HEALTH and SK TELECOM
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PURETECH and KMBA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR and PURETECH HEALTH 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 PURETECH HEALTH PLC 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 TDADR has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and SK TELECOM go up and down completely randomly.
Pair Corralation between PURETECH HEALTH and SK TELECOM
Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the SK TELECOM. In addition to that, PURETECH HEALTH is 1.37 times more volatile than SK TELECOM TDADR. It trades about -0.04 of its total potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.02 per unit of volatility. If you would invest 1,970 in SK TELECOM TDADR on October 26, 2024 and sell it today you would earn a total of 20.00 from holding SK TELECOM TDADR or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PURETECH HEALTH PLC vs. SK TELECOM TDADR
Performance |
| Timeline |
| PURETECH HEALTH PLC |
| SK TELECOM TDADR |
PURETECH HEALTH and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PURETECH HEALTH and SK TELECOM
The main advantage of trading using opposite PURETECH HEALTH and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PURETECH HEALTH 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.| PURETECH HEALTH vs. SK TELECOM TDADR | PURETECH HEALTH vs. Verizon Communications | PURETECH HEALTH vs. Soken Chemical Engineering | PURETECH HEALTH vs. Cairo Communication SpA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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