Correlation Between Airtel Africa and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Airtel Africa 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 Airtel Africa and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airtel Africa Plc and SK Telecom Co, you can compare the effects of market volatilities on Airtel Africa 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 Airtel Africa with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and SK Telecom.
Diversification Opportunities for Airtel Africa and SK Telecom
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airtel and SKM is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Airtel Africa 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 Airtel Africa 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 has no effect on the direction of Airtel Africa i.e., Airtel Africa and SK Telecom go up and down completely randomly.
Pair Corralation between Airtel Africa and SK Telecom
Assuming the 90 days horizon Airtel Africa Plc is expected to under-perform the SK Telecom. In addition to that, Airtel Africa is 3.5 times more volatile than SK Telecom Co. It trades about -0.05 of its total potential returns per unit of risk. SK Telecom Co is currently generating about 0.02 per unit of volatility. If you would invest 2,303 in SK Telecom Co on August 28, 2024 and sell it today you would earn a total of 22.00 from holding SK Telecom Co or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airtel Africa Plc vs. SK Telecom Co
Performance |
| Timeline |
| Airtel Africa Plc |
| SK Telecom |
Airtel Africa and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and SK Telecom
The main advantage of trading using opposite Airtel Africa and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa 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.| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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