Correlation Between SK TELECOM and CyberArk Software
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and CyberArk Software 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 CyberArk Software 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 CyberArk Software, you can compare the effects of market volatilities on SK TELECOM and CyberArk Software 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 CyberArk Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and CyberArk Software.
Diversification Opportunities for SK TELECOM and CyberArk Software
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between KMBA and CyberArk is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software 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 CyberArk Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberArk Software has no effect on the direction of SK TELECOM i.e., SK TELECOM and CyberArk Software go up and down completely randomly.
Pair Corralation between SK TELECOM and CyberArk Software
Assuming the 90 days trading horizon SK TELECOM is expected to generate 1.17 times less return on investment than CyberArk Software. In addition to that, SK TELECOM is 1.06 times more volatile than CyberArk Software. It trades about 0.22 of its total potential returns per unit of risk. CyberArk Software is currently generating about 0.27 per unit of volatility. If you would invest 25,310 in CyberArk Software on September 5, 2024 and sell it today you would earn a total of 5,370 from holding CyberArk Software or generate 21.22% 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. CyberArk Software
Performance |
| Timeline |
| SK TELECOM TDADR |
| CyberArk Software |
SK TELECOM and CyberArk Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and CyberArk Software
The main advantage of trading using opposite SK TELECOM and CyberArk Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, CyberArk Software 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 CyberArk Software will offset losses from the drop in CyberArk Software's long position.The idea behind SK TELECOM TDADR and CyberArk Software 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.| CyberArk Software vs. Gamma Communications plc | CyberArk Software vs. SK TELECOM TDADR | CyberArk Software vs. United Rentals | CyberArk Software vs. T MOBILE INCDL 00001 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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