Correlation Between SK Telecom and T Mobile
Can any of the company-specific risk be diversified away by investing in both SK Telecom and T Mobile 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 T Mobile 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 T Mobile, you can compare the effects of market volatilities on SK Telecom and T Mobile 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 T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and T Mobile.
Diversification Opportunities for SK Telecom and T Mobile
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between S1KM34 and T1MU34 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of SK Telecom i.e., SK Telecom and T Mobile go up and down completely randomly.
Pair Corralation between SK Telecom and T Mobile
Assuming the 90 days trading horizon SK Telecom Co, is expected to generate 0.63 times more return on investment than T Mobile. However, SK Telecom Co, is 1.59 times less risky than T Mobile. It trades about -0.12 of its potential returns per unit of risk. T Mobile is currently generating about -0.23 per unit of risk. If you would invest 3,321 in SK Telecom Co, on October 11, 2024 and sell it today you would lose (103.00) from holding SK Telecom Co, or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
SK Telecom Co, vs. T Mobile
Performance |
| Timeline |
| SK Telecom Co, |
| T Mobile |
SK Telecom and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and T Mobile
The main advantage of trading using opposite SK Telecom and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.| SK Telecom vs. Capital One Financial | SK Telecom vs. Discover Financial Services | SK Telecom vs. Ryanair Holdings plc | SK Telecom vs. Citizens Financial Group, |
| T Mobile vs. Autohome | T Mobile vs. Hormel Foods | T Mobile vs. Eastman Chemical | T Mobile vs. Zoom Video Communications |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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