Correlation Between SK Telecom and Charter Communications
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on SK Telecom and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Charter Communications.
Diversification Opportunities for SK Telecom and Charter Communications
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between S1KM34 and Charter is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of SK Telecom i.e., SK Telecom and Charter Communications go up and down completely randomly.
Pair Corralation between SK Telecom and Charter Communications
Assuming the 90 days trading horizon SK Telecom Co, is expected to generate 0.58 times more return on investment than Charter Communications. However, SK Telecom Co, is 1.72 times less risky than Charter Communications. It trades about 0.07 of its potential returns per unit of risk. Charter Communications is currently generating about 0.01 per unit of risk. If you would invest 2,450 in SK Telecom Co, on October 16, 2024 and sell it today you would earn a total of 768.00 from holding SK Telecom Co, or generate 31.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.03% |
| Values | Daily Returns |
SK Telecom Co, vs. Charter Communications
Performance |
| Timeline |
| SK Telecom Co, |
| Charter Communications |
SK Telecom and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Charter Communications
The main advantage of trading using opposite SK Telecom and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| SK Telecom vs. Micron Technology | SK Telecom vs. Mangels Industrial SA | SK Telecom vs. Paycom Software | SK Telecom vs. Automatic Data Processing |
| Charter Communications vs. STAG Industrial, | Charter Communications vs. METISA Metalrgica Timboense | Charter Communications vs. Burlington Stores, | Charter Communications vs. Ross Stores |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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