Correlation Between SK TELECOM and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on SK TELECOM and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Spirent Communications.
Diversification Opportunities for SK TELECOM and Spirent Communications
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between KMBA and Spirent is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of SK TELECOM i.e., SK TELECOM and Spirent Communications go up and down completely randomly.
Pair Corralation between SK TELECOM and Spirent Communications
Assuming the 90 days trading horizon SK TELECOM is expected to generate 1.41 times less return on investment than Spirent Communications. But when comparing it to its historical volatility, SK TELECOM TDADR is 2.63 times less risky than Spirent Communications. It trades about 0.04 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 209.00 in Spirent Communications plc on September 2, 2024 and sell it today you would lose (3.00) from holding Spirent Communications plc or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Spirent Communications plc
Performance |
| Timeline |
| SK TELECOM TDADR |
| Spirent Communications |
SK TELECOM and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Spirent Communications
The main advantage of trading using opposite SK TELECOM and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| SK TELECOM vs. LG Display Co | SK TELECOM vs. United Airlines Holdings | SK TELECOM vs. Cleanaway Waste Management | SK TELECOM vs. PT Global Mediacom |
| Spirent Communications vs. Deutsche Telekom AG | Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. NMI Holdings | Spirent Communications vs. Origin Agritech |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |