Correlation Between SK Telecom and Automatic Data
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Automatic Data 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 Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Telecom Co, and Automatic Data Processing, you can compare the effects of market volatilities on SK Telecom and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Automatic Data.
Diversification Opportunities for SK Telecom and Automatic Data
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between S1KM34 and Automatic is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Co, are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of SK Telecom i.e., SK Telecom and Automatic Data go up and down completely randomly.
Pair Corralation between SK Telecom and Automatic Data
Assuming the 90 days trading horizon SK Telecom Co, is expected to generate 1.26 times more return on investment than Automatic Data. However, SK Telecom is 1.26 times more volatile than Automatic Data Processing. It trades about -0.12 of its potential returns per unit of risk. Automatic Data Processing is currently generating about -0.16 per unit of risk. If you would invest 3,315 in SK Telecom Co, on October 16, 2024 and sell it today you would lose (97.00) from holding SK Telecom Co, or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co, vs. Automatic Data Processing
Performance |
| Timeline |
| SK Telecom Co, |
| Automatic Data Processing |
SK Telecom and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Automatic Data
The main advantage of trading using opposite SK Telecom and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| SK Telecom vs. Micron Technology | SK Telecom vs. Mangels Industrial SA | SK Telecom vs. Paycom Software | SK Telecom vs. Automatic Data Processing |
| Automatic Data vs. Charter Communications | Automatic Data vs. BIONTECH SE DRN | Automatic Data vs. SK Telecom Co, | Automatic Data vs. Public Storage |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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