Correlation Between SK Telecom and Phillips
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on SK Telecom and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Phillips.
Diversification Opportunities for SK Telecom and Phillips
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between S1KM34 and Phillips is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of SK Telecom i.e., SK Telecom and Phillips go up and down completely randomly.
Pair Corralation between SK Telecom and Phillips
Assuming the 90 days trading horizon SK Telecom Co, is expected to under-perform the Phillips. In addition to that, SK Telecom is 1.29 times more volatile than Phillips 66. It trades about -0.05 of its total potential returns per unit of risk. Phillips 66 is currently generating about -0.03 per unit of volatility. If you would invest 36,864 in Phillips 66 on October 26, 2024 and sell it today you would lose (1,326) from holding Phillips 66 or give up 3.6% 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. Phillips 66
Performance |
| Timeline |
| SK Telecom Co, |
| Phillips 66 |
SK Telecom and Phillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Phillips
The main advantage of trading using opposite SK Telecom and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.| SK Telecom vs. Ryanair Holdings plc | SK Telecom vs. Taiwan Semiconductor Manufacturing | SK Telecom vs. Fair Isaac | SK Telecom vs. Deutsche Bank Aktiengesellschaft |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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