Correlation Between Electronic Arts and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Electronic Arts 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 Electronic Arts and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and SK Telecom Co, you can compare the effects of market volatilities on Electronic Arts 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 Electronic Arts with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and SK Telecom.
Diversification Opportunities for Electronic Arts and SK Telecom
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and SKM is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Electronic Arts 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 Electronic Arts 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 Electronic Arts i.e., Electronic Arts and SK Telecom go up and down completely randomly.
Pair Corralation between Electronic Arts and SK Telecom
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.97 times more return on investment than SK Telecom. However, Electronic Arts is 1.03 times less risky than SK Telecom. It trades about 0.05 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.05 per unit of risk. If you would invest 12,330 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 3,980 from holding Electronic Arts or generate 32.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. SK Telecom Co
Performance |
| Timeline |
| Electronic Arts |
| SK Telecom |
Electronic Arts and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and SK Telecom
The main advantage of trading using opposite Electronic Arts and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts 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.| Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Roblox Corp | Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software |
| SK Telecom vs. TIM Participacoes SA | SK Telecom vs. PLDT Inc ADR | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Liberty Broadband Srs |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |