Correlation Between China Communications and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both China 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 China 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 China Communications Services and SK TELECOM TDADR, you can compare the effects of market volatilities on China 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 China Communications with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and SK TELECOM.
Diversification Opportunities for China Communications and SK TELECOM
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and KMBA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services 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 China 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 China Communications Services 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 China Communications i.e., China Communications and SK TELECOM go up and down completely randomly.
Pair Corralation between China Communications and SK TELECOM
Assuming the 90 days horizon China Communications Services is expected to under-perform the SK TELECOM. In addition to that, China Communications is 1.07 times more volatile than SK TELECOM TDADR. It trades about -0.06 of its total potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.01 per unit of volatility. If you would invest 2,020 in SK TELECOM TDADR on November 3, 2024 and sell it today you would earn a total of 0.00 from holding SK TELECOM TDADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Communications Services vs. SK TELECOM TDADR
Performance |
| Timeline |
| China Communications |
| SK TELECOM TDADR |
China Communications and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and SK TELECOM
The main advantage of trading using opposite China Communications and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China 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.| China Communications vs. T Mobile | China Communications vs. China Mobile Limited | China Communications vs. Verizon Communications | China Communications vs. ATT Inc |
| SK TELECOM vs. SIVERS SEMICONDUCTORS AB | SK TELECOM vs. NorAm Drilling AS | SK TELECOM vs. Volkswagen AG | SK TELECOM vs. Darden Restaurants |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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