Correlation Between SK TELECOM and DexCom
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and DexCom 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 DexCom 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 DexCom Inc, you can compare the effects of market volatilities on SK TELECOM and DexCom 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 DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and DexCom.
Diversification Opportunities for SK TELECOM and DexCom
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KMBA and DexCom is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc 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 DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of SK TELECOM i.e., SK TELECOM and DexCom go up and down completely randomly.
Pair Corralation between SK TELECOM and DexCom
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 1.53 times more return on investment than DexCom. However, SK TELECOM is 1.53 times more volatile than DexCom Inc. It trades about 0.19 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.25 per unit of risk. If you would invest 1,970 in SK TELECOM TDADR on September 1, 2024 and sell it today you would earn a total of 290.00 from holding SK TELECOM TDADR or generate 14.72% 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. DexCom Inc
Performance |
| Timeline |
| SK TELECOM TDADR |
| DexCom Inc |
SK TELECOM and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and DexCom
The main advantage of trading using opposite SK TELECOM and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, DexCom 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 DexCom will offset losses from the drop in DexCom's long position.The idea behind SK TELECOM TDADR and DexCom Inc 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.| DexCom vs. SK TELECOM TDADR | DexCom vs. Citic Telecom International | DexCom vs. Selective Insurance Group | DexCom vs. Universal Insurance Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |