Correlation Between SK Telecom and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Monster Beverage 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 Monster Beverage 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 Monster Beverage, you can compare the effects of market volatilities on SK Telecom and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Monster Beverage.
Diversification Opportunities for SK Telecom and Monster Beverage
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between S1KM34 and Monster is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of SK Telecom i.e., SK Telecom and Monster Beverage go up and down completely randomly.
Pair Corralation between SK Telecom and Monster Beverage
Assuming the 90 days trading horizon SK Telecom Co, is expected to generate 0.82 times more return on investment than Monster Beverage. However, SK Telecom Co, is 1.22 times less risky than Monster Beverage. It trades about 0.06 of its potential returns per unit of risk. Monster Beverage is currently generating about 0.04 per unit of risk. If you would invest 2,517 in SK Telecom Co, on December 11, 2024 and sell it today you would earn a total of 578.00 from holding SK Telecom Co, or generate 22.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co, vs. Monster Beverage
Performance |
| Timeline |
| SK Telecom Co, |
| Monster Beverage |
SK Telecom and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Monster Beverage
The main advantage of trading using opposite SK Telecom and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| SK Telecom vs. METISA Metalrgica Timboense | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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