Correlation Between SK TELECOM and Merck
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Merck 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 SK TELECOM and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK TELECOM TDADR and Merck Co, you can compare the effects of market volatilities on SK TELECOM and Merck 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 SK TELECOM with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Merck.
Diversification Opportunities for SK TELECOM and Merck
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KMBA and Merck is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Merck Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck and SK TELECOM 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 SK TELECOM TDADR are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck has no effect on the direction of SK TELECOM i.e., SK TELECOM and Merck go up and down completely randomly.
Pair Corralation between SK TELECOM and Merck
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 2.06 times more return on investment than Merck. However, SK TELECOM is 2.06 times more volatile than Merck Co. It trades about 0.0 of its potential returns per unit of risk. Merck Co is currently generating about -0.05 per unit of risk. If you would invest 2,100 in SK TELECOM TDADR on September 12, 2024 and sell it today you would lose (40.00) from holding SK TELECOM TDADR or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Merck Co
Performance |
| Timeline |
| SK TELECOM TDADR |
| Merck |
SK TELECOM and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Merck
The main advantage of trading using opposite SK TELECOM and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| SK TELECOM vs. Coor Service Management | SK TELECOM vs. Corporate Travel Management | SK TELECOM vs. AOYAMA TRADING | SK TELECOM vs. CeoTronics AG |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |