Correlation Between Ming Le and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Ming Le and SK TELECOM 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 Ming Le and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ming Le Sports and SK TELECOM TDADR, you can compare the effects of market volatilities on Ming Le and SK TELECOM 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 Ming Le with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and SK TELECOM.
Diversification Opportunities for Ming Le and SK TELECOM
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ming and KMBA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR and Ming Le 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 Ming Le Sports are associated (or correlated) with SK TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK TELECOM TDADR has no effect on the direction of Ming Le i.e., Ming Le and SK TELECOM go up and down completely randomly.
Pair Corralation between Ming Le and SK TELECOM
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 1.64 times more return on investment than SK TELECOM. However, Ming Le is 1.64 times more volatile than SK TELECOM TDADR. It trades about 0.08 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.08 per unit of risk. If you would invest 104.00 in Ming Le Sports on August 31, 2024 and sell it today you would earn a total of 35.00 from holding Ming Le Sports or generate 33.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Ming Le Sports vs. SK TELECOM TDADR
Performance |
| Timeline |
| Ming Le Sports |
| SK TELECOM TDADR |
Ming Le and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and SK TELECOM
The main advantage of trading using opposite Ming Le and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, SK TELECOM 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 SK TELECOM will offset losses from the drop in SK TELECOM's long position.The idea behind Ming Le Sports and SK TELECOM TDADR 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.| SK TELECOM vs. SEI INVESTMENTS | SK TELECOM vs. Apollo Investment Corp | SK TELECOM vs. Strategic Investments AS | SK TELECOM vs. SIDETRADE EO 1 |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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