Correlation Between Advanced Info and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Advanced Info 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 Advanced Info and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Info Service and SK TELECOM TDADR, you can compare the effects of market volatilities on Advanced Info 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 Advanced Info with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and SK TELECOM.
Diversification Opportunities for Advanced Info and SK TELECOM
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advanced and KMBA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service 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 Advanced Info 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 Advanced Info Service 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 Advanced Info i.e., Advanced Info and SK TELECOM go up and down completely randomly.
Pair Corralation between Advanced Info and SK TELECOM
Assuming the 90 days trading horizon Advanced Info Service is expected to generate 0.77 times more return on investment than SK TELECOM. However, Advanced Info Service is 1.29 times less risky than SK TELECOM. It trades about 0.07 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.03 per unit of risk. If you would invest 498.00 in Advanced Info Service on September 4, 2024 and sell it today you would earn a total of 277.00 from holding Advanced Info Service or generate 55.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.66% |
| Values | Daily Returns |
Advanced Info Service vs. SK TELECOM TDADR
Performance |
| Timeline |
| Advanced Info Service |
| SK TELECOM TDADR |
Advanced Info and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Info and SK TELECOM
The main advantage of trading using opposite Advanced Info and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Info 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.| Advanced Info vs. T Mobile | Advanced Info vs. China Mobile Limited | Advanced Info vs. ATT Inc | Advanced Info vs. Nippon Telegraph and |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Positions Ratings 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 |