Correlation Between Centene Corp and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Centene Corp 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 Centene Corp and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and SK TELECOM TDADR, you can compare the effects of market volatilities on Centene Corp 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 Centene Corp with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and SK TELECOM.
Diversification Opportunities for Centene Corp and SK TELECOM
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Centene and KMBA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp 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 Centene Corp 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 Centene Corp 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 Centene Corp i.e., Centene Corp and SK TELECOM go up and down completely randomly.
Pair Corralation between Centene Corp and SK TELECOM
Assuming the 90 days horizon Centene Corp is expected to generate 2.79 times less return on investment than SK TELECOM. But when comparing it to its historical volatility, Centene Corp is 1.66 times less risky than SK TELECOM. It trades about 0.04 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,970 in SK TELECOM TDADR on August 27, 2024 and sell it today you would earn a total of 70.00 from holding SK TELECOM TDADR or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Centene Corp vs. SK TELECOM TDADR
Performance |
| Timeline |
| Centene Corp |
| SK TELECOM TDADR |
Centene Corp and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and SK TELECOM
The main advantage of trading using opposite Centene Corp and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp 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.| Centene Corp vs. SK TELECOM TDADR | Centene Corp vs. Martin Marietta Materials | Centene Corp vs. Eagle Materials | Centene Corp vs. Gamma Communications 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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