Correlation Between SK TELECOM and TELECOM ITALIA
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and TELECOM ITALIA 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 TELECOM ITALIA 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 TELECOM ITALIA, you can compare the effects of market volatilities on SK TELECOM and TELECOM ITALIA 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 TELECOM ITALIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and TELECOM ITALIA.
Diversification Opportunities for SK TELECOM and TELECOM ITALIA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between KMBA and TELECOM is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and TELECOM ITALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALIA 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 TELECOM ITALIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELECOM ITALIA has no effect on the direction of SK TELECOM i.e., SK TELECOM and TELECOM ITALIA go up and down completely randomly.
Pair Corralation between SK TELECOM and TELECOM ITALIA
Assuming the 90 days trading horizon SK TELECOM is expected to generate 58.66 times less return on investment than TELECOM ITALIA. But when comparing it to its historical volatility, SK TELECOM TDADR is 2.25 times less risky than TELECOM ITALIA. It trades about 0.01 of its potential returns per unit of risk. TELECOM ITALIA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 24.00 in TELECOM ITALIA on November 3, 2024 and sell it today you would earn a total of 2.00 from holding TELECOM ITALIA or generate 8.33% 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. TELECOM ITALIA
Performance |
| Timeline |
| SK TELECOM TDADR |
| TELECOM ITALIA |
SK TELECOM and TELECOM ITALIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and TELECOM ITALIA
The main advantage of trading using opposite SK TELECOM and TELECOM ITALIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, TELECOM ITALIA 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 TELECOM ITALIA will offset losses from the drop in TELECOM ITALIA'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 |
| TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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