Correlation Between COSTCO WHOLESALE and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE 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 COSTCO WHOLESALE and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and SK TELECOM TDADR, you can compare the effects of market volatilities on COSTCO WHOLESALE 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 COSTCO WHOLESALE with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and SK TELECOM.
Diversification Opportunities for COSTCO WHOLESALE and SK TELECOM
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COSTCO and KMBA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE i.e., COSTCO WHOLESALE and SK TELECOM go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and SK TELECOM
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 1.82 times more return on investment than SK TELECOM. However, COSTCO WHOLESALE is 1.82 times more volatile than SK TELECOM TDADR. It trades about -0.01 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.09 per unit of risk. If you would invest 2,880 in COSTCO WHOLESALE CDR on October 28, 2024 and sell it today you would lose (20.00) from holding COSTCO WHOLESALE CDR or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. SK TELECOM TDADR
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| SK TELECOM TDADR |
COSTCO WHOLESALE and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and SK TELECOM
The main advantage of trading using opposite COSTCO WHOLESALE and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE 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.| COSTCO WHOLESALE vs. Phibro Animal Health | COSTCO WHOLESALE vs. RCI Hospitality Holdings | COSTCO WHOLESALE vs. WESANA HEALTH HOLD | COSTCO WHOLESALE vs. Ameriprise Financial |
| SK TELECOM vs. Ryanair Holdings plc | SK TELECOM vs. Wizz Air Holdings | SK TELECOM vs. SYSTEMAIR AB | SK TELECOM vs. STRAYER EDUCATION |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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