Correlation Between Gamma Communications and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and SK TELECOM TDADR, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and SK TELECOM.
Diversification Opportunities for Gamma Communications and SK TELECOM
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gamma and KMBA is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications 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 Gamma Communications 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 Gamma Communications 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 Gamma Communications i.e., Gamma Communications and SK TELECOM go up and down completely randomly.
Pair Corralation between Gamma Communications and SK TELECOM
Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.45 times more return on investment than SK TELECOM. However, Gamma Communications plc is 2.21 times less risky than SK TELECOM. It trades about -0.01 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.04 per unit of risk. If you would invest 1,870 in Gamma Communications plc on August 25, 2024 and sell it today you would lose (10.00) from holding Gamma Communications plc or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. SK TELECOM TDADR
Performance |
| Timeline |
| Gamma Communications plc |
| SK TELECOM TDADR |
Gamma Communications and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and SK TELECOM
The main advantage of trading using opposite Gamma Communications and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. T Mobile | Gamma Communications vs. ATT Inc | Gamma Communications vs. Deutsche Telekom AG | Gamma Communications vs. Nippon Telegraph and |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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