Correlation Between SK TELECOM and Coca Cola
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Coca Cola 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 Coca Cola 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 Coca Cola HBC, you can compare the effects of market volatilities on SK TELECOM and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Coca Cola.
Diversification Opportunities for SK TELECOM and Coca Cola
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between KMBA and Coca is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola HBC has no effect on the direction of SK TELECOM i.e., SK TELECOM and Coca Cola go up and down completely randomly.
Pair Corralation between SK TELECOM and Coca Cola
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 1.64 times more return on investment than Coca Cola. However, SK TELECOM is 1.64 times more volatile than Coca Cola HBC. It trades about 0.09 of its potential returns per unit of risk. Coca Cola HBC is currently generating about 0.03 per unit of risk. If you would invest 2,000 in SK TELECOM TDADR on September 4, 2024 and sell it today you would earn a total of 260.00 from holding SK TELECOM TDADR or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Coca Cola HBC
Performance |
| Timeline |
| SK TELECOM TDADR |
| Coca Cola HBC |
SK TELECOM and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Coca Cola
The main advantage of trading using opposite SK TELECOM and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.The idea behind SK TELECOM TDADR and Coca Cola HBC 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.| Coca Cola vs. Spirent Communications plc | Coca Cola vs. SK TELECOM TDADR | Coca Cola vs. Tower One Wireless | Coca Cola vs. Entravision Communications |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stocks Directory Find actively traded stocks across global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |