Correlation Between SK TELECOM and COSCO SHIPPING
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and COSCO SHIPPING 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 COSCO SHIPPING 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 COSCO SHIPPING Holdings, you can compare the effects of market volatilities on SK TELECOM and COSCO SHIPPING 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 COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and COSCO SHIPPING.
Diversification Opportunities for SK TELECOM and COSCO SHIPPING
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KMBA and COSCO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of SK TELECOM i.e., SK TELECOM and COSCO SHIPPING go up and down completely randomly.
Pair Corralation between SK TELECOM and COSCO SHIPPING
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 1.25 times more return on investment than COSCO SHIPPING. However, SK TELECOM is 1.25 times more volatile than COSCO SHIPPING Holdings. It trades about 0.24 of its potential returns per unit of risk. COSCO SHIPPING Holdings is currently generating about -0.05 per unit of risk. If you would invest 1,920 in SK TELECOM TDADR on September 4, 2024 and sell it today you would earn a total of 340.00 from holding SK TELECOM TDADR or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SK TELECOM TDADR vs. COSCO SHIPPING Holdings
Performance |
| Timeline |
| SK TELECOM TDADR |
| COSCO SHIPPING Holdings |
SK TELECOM and COSCO SHIPPING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and COSCO SHIPPING
The main advantage of trading using opposite SK TELECOM and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.The idea behind SK TELECOM TDADR and COSCO SHIPPING Holdings 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.| COSCO SHIPPING vs. TITANIUM TRANSPORTGROUP | COSCO SHIPPING vs. LG Display Co | COSCO SHIPPING vs. Consolidated Communications Holdings | COSCO SHIPPING vs. Ribbon 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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