Correlation Between SK TELECOM and Transportadora
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on SK TELECOM and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Transportadora.
Diversification Opportunities for SK TELECOM and Transportadora
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KMBA and Transportadora is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of SK TELECOM i.e., SK TELECOM and Transportadora go up and down completely randomly.
Pair Corralation between SK TELECOM and Transportadora
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, SK TELECOM TDADR is 1.57 times less risky than Transportadora. The stock trades about -0.01 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,160 in Transportadora de Gas on September 13, 2024 and sell it today you would earn a total of 400.00 from holding Transportadora de Gas or generate 18.52% 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. Transportadora de Gas
Performance |
| Timeline |
| SK TELECOM TDADR |
| Transportadora de Gas |
SK TELECOM and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Transportadora
The main advantage of trading using opposite SK TELECOM and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.The idea behind SK TELECOM TDADR and Transportadora de Gas 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.| Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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