Correlation Between Consolidated Communications and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Consolidated 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 Consolidated 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 Consolidated Communications Holdings and SK TELECOM TDADR, you can compare the effects of market volatilities on Consolidated 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 Consolidated Communications with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and SK TELECOM.
Diversification Opportunities for Consolidated Communications and SK TELECOM
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consolidated and KMBA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho 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 Consolidated 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 Consolidated Communications Holdings 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 Consolidated Communications i.e., Consolidated Communications and SK TELECOM go up and down completely randomly.
Pair Corralation between Consolidated Communications and SK TELECOM
Assuming the 90 days horizon Consolidated Communications is expected to generate 1.21 times less return on investment than SK TELECOM. But when comparing it to its historical volatility, Consolidated Communications Holdings is 2.96 times less risky than SK TELECOM. It trades about 0.18 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,970 in SK TELECOM TDADR on August 27, 2024 and sell it today you would earn a total of 70.00 from holding SK TELECOM TDADR or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Consolidated Communications Ho vs. SK TELECOM TDADR
Performance |
| Timeline |
| Consolidated Communications |
| SK TELECOM TDADR |
Consolidated Communications and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Communications and SK TELECOM
The main advantage of trading using opposite Consolidated Communications and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated 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.The idea behind Consolidated Communications Holdings and SK TELECOM TDADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |