Correlation Between Fortescue Metals and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and SK TELECOM TDADR, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and SK TELECOM.
Diversification Opportunities for Fortescue Metals and SK TELECOM
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortescue and KMBA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group 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 Fortescue Metals 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and SK TELECOM go up and down completely randomly.
Pair Corralation between Fortescue Metals and SK TELECOM
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.95 times more return on investment than SK TELECOM. However, Fortescue Metals Group is 1.05 times less risky than SK TELECOM. It trades about 0.04 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.01 per unit of risk. If you would invest 1,075 in Fortescue Metals Group on October 18, 2024 and sell it today you would earn a total of 62.00 from holding Fortescue Metals Group or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. SK TELECOM TDADR
Performance |
| Timeline |
| Fortescue Metals |
| SK TELECOM TDADR |
Fortescue Metals and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and SK TELECOM
The main advantage of trading using opposite Fortescue Metals and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.| Fortescue Metals vs. Medical Properties Trust | Fortescue Metals vs. Peijia Medical Limited | Fortescue Metals vs. Wyndham Hotels Resorts | Fortescue Metals vs. Summit Hotel Properties |
| SK TELECOM vs. ANTA SPORTS PRODUCT | SK TELECOM vs. MAGIC SOFTWARE ENTR | SK TELECOM vs. Fortescue Metals Group | SK TELECOM vs. JD SPORTS FASH |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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