Correlation Between SK TELECOM and KOBE STEEL
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and KOBE STEEL 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 KOBE STEEL 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 KOBE STEEL LTD, you can compare the effects of market volatilities on SK TELECOM and KOBE STEEL 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 KOBE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and KOBE STEEL.
Diversification Opportunities for SK TELECOM and KOBE STEEL
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KMBA and KOBE is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and KOBE STEEL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOBE STEEL LTD 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 KOBE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOBE STEEL LTD has no effect on the direction of SK TELECOM i.e., SK TELECOM and KOBE STEEL go up and down completely randomly.
Pair Corralation between SK TELECOM and KOBE STEEL
Assuming the 90 days trading horizon SK TELECOM is expected to generate 54.03 times less return on investment than KOBE STEEL. But when comparing it to its historical volatility, SK TELECOM TDADR is 1.09 times less risky than KOBE STEEL. It trades about 0.01 of its potential returns per unit of risk. KOBE STEEL LTD is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 975.00 in KOBE STEEL LTD on November 3, 2024 and sell it today you would earn a total of 80.00 from holding KOBE STEEL LTD or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. KOBE STEEL LTD
Performance |
| Timeline |
| SK TELECOM TDADR |
| KOBE STEEL LTD |
SK TELECOM and KOBE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and KOBE STEEL
The main advantage of trading using opposite SK TELECOM and KOBE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, KOBE STEEL 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 KOBE STEEL will offset losses from the drop in KOBE STEEL's long position.| SK TELECOM vs. SIVERS SEMICONDUCTORS AB | SK TELECOM vs. NorAm Drilling AS | SK TELECOM vs. Volkswagen AG | SK TELECOM vs. Darden Restaurants |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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