Correlation Between SK TELECOM and T MOBILE

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Can any of the company-specific risk be diversified away by investing in both SK TELECOM and T MOBILE 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 T MOBILE 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 T MOBILE INCDL 00001, you can compare the effects of market volatilities on SK TELECOM and T MOBILE 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 T MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and T MOBILE.

Diversification Opportunities for SK TELECOM and T MOBILE

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between KMBA and TM5 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and T MOBILE INCDL 00001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE INCDL 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 T MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE INCDL has no effect on the direction of SK TELECOM i.e., SK TELECOM and T MOBILE go up and down completely randomly.

Pair Corralation between SK TELECOM and T MOBILE

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 2.57 times more return on investment than T MOBILE. However, SK TELECOM is 2.57 times more volatile than T MOBILE INCDL 00001. It trades about 0.02 of its potential returns per unit of risk. T MOBILE INCDL 00001 is currently generating about 0.01 per unit of risk. If you would invest  2,080  in SK TELECOM TDADR on September 12, 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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SK TELECOM TDADR  vs.  T MOBILE INCDL 00001

 Performance 
       Timeline  
SK TELECOM TDADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SK TELECOM TDADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, SK TELECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
T MOBILE INCDL 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

SK TELECOM and T MOBILE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SK TELECOM and T MOBILE

The main advantage of trading using opposite SK TELECOM and T MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, T MOBILE 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 T MOBILE will offset losses from the drop in T MOBILE's long position.
The idea behind SK TELECOM TDADR and T MOBILE INCDL 00001 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.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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