Correlation Between Automatic Data and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Automatic Data 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 Automatic Data and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and SK Telecom Co,, you can compare the effects of market volatilities on Automatic Data 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 Automatic Data with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and SK Telecom.
Diversification Opportunities for Automatic Data and SK Telecom
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automatic and S1KM34 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and SK Telecom Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom Co, and Automatic Data 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 Automatic Data Processing 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 Co, has no effect on the direction of Automatic Data i.e., Automatic Data and SK Telecom go up and down completely randomly.
Pair Corralation between Automatic Data and SK Telecom
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 1.14 times more return on investment than SK Telecom. However, Automatic Data is 1.14 times more volatile than SK Telecom Co,. It trades about 0.11 of its potential returns per unit of risk. SK Telecom Co, is currently generating about 0.07 per unit of risk. If you would invest 4,981 in Automatic Data Processing on October 16, 2024 and sell it today you would earn a total of 2,354 from holding Automatic Data Processing or generate 47.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 73.44% |
| Values | Daily Returns |
Automatic Data Processing vs. SK Telecom Co,
Performance |
| Timeline |
| Automatic Data Processing |
| SK Telecom Co, |
Automatic Data and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and SK Telecom
The main advantage of trading using opposite Automatic Data and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data 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.| Automatic Data vs. Charter Communications | Automatic Data vs. BIONTECH SE DRN | Automatic Data vs. SK Telecom Co, | Automatic Data vs. Public Storage |
| SK Telecom vs. Micron Technology | SK Telecom vs. Mangels Industrial SA | SK Telecom vs. Paycom Software | SK Telecom vs. Automatic Data Processing |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |