Correlation Between Summit Materials and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and SK TELECOM TDADR, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and SK TELECOM.
Diversification Opportunities for Summit Materials and SK TELECOM
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and KMBA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and SK TELECOM go up and down completely randomly.
Pair Corralation between Summit Materials and SK TELECOM
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.68 times more return on investment than SK TELECOM. However, Summit Materials is 1.47 times less risky than SK TELECOM. It trades about 0.11 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.29 per unit of risk. If you would invest 4,820 in Summit Materials on October 30, 2024 and sell it today you would earn a total of 160.00 from holding Summit Materials or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. SK TELECOM TDADR
Performance |
| Timeline |
| Summit Materials |
| SK TELECOM TDADR |
Summit Materials and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and SK TELECOM
The main advantage of trading using opposite Summit Materials and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. JAPAN AIRLINES | Summit Materials vs. Semiconductor Manufacturing International | Summit Materials vs. TOREX SEMICONDUCTOR LTD | Summit Materials vs. International Consolidated Airlines |
| SK TELECOM vs. Infrastrutture Wireless Italiane | SK TELECOM vs. Major Drilling Group | SK TELECOM vs. PICKN PAY STORES | SK TELECOM vs. COSTCO WHOLESALE CDR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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