Correlation Between SK TELECOM and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Citic 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 SK TELECOM and Citic Telecom 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 Citic Telecom International, you can compare the effects of market volatilities on SK TELECOM and Citic 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 SK TELECOM with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Citic Telecom.
Diversification Opportunities for SK TELECOM and Citic Telecom
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between KMBA and Citic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern 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 Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of SK TELECOM i.e., SK TELECOM and Citic Telecom go up and down completely randomly.
Pair Corralation between SK TELECOM and Citic Telecom
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to under-perform the Citic Telecom. In addition to that, SK TELECOM is 1.55 times more volatile than Citic Telecom International. It trades about -0.04 of its total potential returns per unit of risk. Citic Telecom International is currently generating about 0.09 per unit of volatility. If you would invest 26.00 in Citic Telecom International on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Citic Telecom International or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Citic Telecom International
Performance |
| Timeline |
| SK TELECOM TDADR |
| Citic Telecom Intern |
SK TELECOM and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Citic Telecom
The main advantage of trading using opposite SK TELECOM and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Citic 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.The idea behind SK TELECOM TDADR and Citic Telecom International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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