Correlation Between SK Telecom and Bank of America
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Bank of America 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 Bank of America 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 Bank of America, you can compare the effects of market volatilities on SK Telecom and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Bank of America.
Diversification Opportunities for SK Telecom and Bank of America
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between S1KM34 and Bank is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of SK Telecom i.e., SK Telecom and Bank of America go up and down completely randomly.
Pair Corralation between SK Telecom and Bank of America
Assuming the 90 days trading horizon SK Telecom is expected to generate 1.55 times less return on investment than Bank of America. But when comparing it to its historical volatility, SK Telecom Co, is 1.06 times less risky than Bank of America. It trades about 0.07 of its potential returns per unit of risk. Bank of America is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,831 in Bank of America on December 12, 2024 and sell it today you would earn a total of 1,946 from holding Bank of America or generate 50.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co, vs. Bank of America
Performance |
| Timeline |
| SK Telecom Co, |
| Bank of America |
SK Telecom and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Bank of America
The main advantage of trading using opposite SK Telecom and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| SK Telecom vs. METISA Metalrgica Timboense | ||
| SK Telecom vs. Unifique Telecomunicaes SA | ||
| SK Telecom vs. Spotify Technology SA | ||
| SK Telecom vs. Marfrig Global Foods |
| Bank of America vs. Check Point Software | ||
| Bank of America vs. Charter Communications | ||
| Bank of America vs. Zoom Video Communications | ||
| Bank of America vs. Uber Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |