Correlation Between SK TELECOM and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on SK TELECOM and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Yokohama Rubber.
Diversification Opportunities for SK TELECOM and Yokohama Rubber
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KMBA and Yokohama is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of SK TELECOM i.e., SK TELECOM and Yokohama Rubber go up and down completely randomly.
Pair Corralation between SK TELECOM and Yokohama Rubber
Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 1.51 times more return on investment than Yokohama Rubber. However, SK TELECOM is 1.51 times more volatile than The Yokohama Rubber. It trades about 0.09 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.03 per unit of risk. If you would invest 1,970 in SK TELECOM TDADR on August 31, 2024 and sell it today you would earn a total of 90.00 from holding SK TELECOM TDADR or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
SK TELECOM TDADR vs. The Yokohama Rubber
Performance |
| Timeline |
| SK TELECOM TDADR |
| Yokohama Rubber |
SK TELECOM and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Yokohama Rubber
The main advantage of trading using opposite SK TELECOM and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| SK TELECOM vs. SEI INVESTMENTS | SK TELECOM vs. Apollo Investment Corp | SK TELECOM vs. Strategic Investments AS | SK TELECOM vs. SIDETRADE EO 1 |
| Yokohama Rubber vs. UNIVMUSIC GRPADR050 | Yokohama Rubber vs. Treasury Wine Estates | Yokohama Rubber vs. PARKEN Sport Entertainment | Yokohama Rubber vs. Flutter Entertainment PLC |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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