Correlation Between SK Telecom and Hannover Rck
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Hannover Rck 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 Hannover Rck 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 Hannover Rck SE, you can compare the effects of market volatilities on SK Telecom and Hannover Rck 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 Hannover Rck. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Hannover Rck.
Diversification Opportunities for SK Telecom and Hannover Rck
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SKM and Hannover is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE 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 Hannover Rck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of SK Telecom i.e., SK Telecom and Hannover Rck go up and down completely randomly.
Pair Corralation between SK Telecom and Hannover Rck
Considering the 90-day investment horizon SK Telecom is expected to generate 3.55 times less return on investment than Hannover Rck. But when comparing it to its historical volatility, SK Telecom Co is 1.61 times less risky than Hannover Rck. It trades about 0.03 of its potential returns per unit of risk. Hannover Rck SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14,575 in Hannover Rck SE on September 19, 2024 and sell it today you would earn a total of 11,730 from holding Hannover Rck SE or generate 80.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SK Telecom Co vs. Hannover Rck SE
Performance |
| Timeline |
| SK Telecom |
| Hannover Rck SE |
SK Telecom and Hannover Rck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Hannover Rck
The main advantage of trading using opposite SK Telecom and Hannover Rck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Hannover Rck 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 Hannover Rck will offset losses from the drop in Hannover Rck's long position.| SK Telecom vs. TIM Participacoes SA | SK Telecom vs. PLDT Inc ADR | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Liberty Broadband Srs |
| Hannover Rck vs. Swiss Re | Hannover Rck vs. Hannover Re | Hannover Rck vs. SCOR PK | Hannover Rck vs. SiriusPoint |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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