Correlation Between SK TELECOM and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Methode Electronics 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 Methode Electronics 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 Methode Electronics, you can compare the effects of market volatilities on SK TELECOM and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Methode Electronics.
Diversification Opportunities for SK TELECOM and Methode Electronics
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KMBA and Methode is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of SK TELECOM i.e., SK TELECOM and Methode Electronics go up and down completely randomly.
Pair Corralation between SK TELECOM and Methode Electronics
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 0.26 times more return on investment than Methode Electronics. However, SK TELECOM TDADR is 3.82 times less risky than Methode Electronics. It trades about 0.0 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.22 per unit of risk. If you would invest 2,040 in SK TELECOM TDADR on October 18, 2024 and sell it today you would earn a total of 0.00 from holding SK TELECOM TDADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Methode Electronics
Performance |
| Timeline |
| SK TELECOM TDADR |
| Methode Electronics |
SK TELECOM and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Methode Electronics
The main advantage of trading using opposite SK TELECOM and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| SK TELECOM vs. ANTA SPORTS PRODUCT | SK TELECOM vs. MAGIC SOFTWARE ENTR | SK TELECOM vs. Fortescue Metals Group | SK TELECOM vs. JD SPORTS FASH |
| Methode Electronics vs. SK TELECOM TDADR | Methode Electronics vs. Tianjin Capital Environmental | Methode Electronics vs. The Japan Steel | Methode Electronics vs. Xiwang Special Steel |
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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