Correlation Between SK TELECOM and Ambev SA
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Ambev SA 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 Ambev SA 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 Ambev SA, you can compare the effects of market volatilities on SK TELECOM and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Ambev SA.
Diversification Opportunities for SK TELECOM and Ambev SA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KMBA and Ambev is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of SK TELECOM i.e., SK TELECOM and Ambev SA go up and down completely randomly.
Pair Corralation between SK TELECOM and Ambev SA
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 0.91 times more return on investment than Ambev SA. However, SK TELECOM TDADR is 1.09 times less risky than Ambev SA. It trades about 0.04 of its potential returns per unit of risk. Ambev SA is currently generating about -0.03 per unit of risk. If you would invest 1,820 in SK TELECOM TDADR on October 12, 2024 and sell it today you would earn a total of 200.00 from holding SK TELECOM TDADR or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Ambev SA
Performance |
| Timeline |
| SK TELECOM TDADR |
| Ambev SA |
SK TELECOM and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Ambev SA
The main advantage of trading using opposite SK TELECOM and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| SK TELECOM vs. SILICON LABORATOR | SK TELECOM vs. Compagnie Plastic Omnium | SK TELECOM vs. SANOK RUBBER ZY | SK TELECOM vs. The Yokohama Rubber |
| Ambev SA vs. ADRIATIC METALS LS 013355 | Ambev SA vs. Highlight Communications AG | Ambev SA vs. Chunghwa Telecom Co | Ambev SA vs. SK TELECOM TDADR |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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