Correlation Between SK Telecom and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on SK Telecom and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Deutsche Telekom.
Diversification Opportunities for SK Telecom and Deutsche Telekom
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SKM and Deutsche is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of SK Telecom i.e., SK Telecom and Deutsche Telekom go up and down completely randomly.
Pair Corralation between SK Telecom and Deutsche Telekom
Considering the 90-day investment horizon SK Telecom is expected to generate 1.6 times less return on investment than Deutsche Telekom. In addition to that, SK Telecom is 1.05 times more volatile than Deutsche Telekom AG. It trades about 0.04 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.06 per unit of volatility. If you would invest 1,969 in Deutsche Telekom AG on August 27, 2024 and sell it today you would earn a total of 224.00 from holding Deutsche Telekom AG or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.65% |
| Values | Daily Returns |
SK Telecom Co vs. Deutsche Telekom AG
Performance |
| Timeline |
| SK Telecom |
| Deutsche Telekom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SK Telecom and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Deutsche Telekom
The main advantage of trading using opposite SK Telecom and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| SK Telecom vs. Anterix | SK Telecom vs. Liberty Broadband Corp | SK Telecom vs. Ooma Inc | SK Telecom vs. IDT Corporation |
| Deutsche Telekom vs. KDDI Corp PK | Deutsche Telekom vs. Nippon Telegraph Telephone | Deutsche Telekom vs. Softbank Group Corp | Deutsche Telekom vs. KT Corporation |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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