Correlation Between SK Telecom and MTN Group
Can any of the company-specific risk be diversified away by investing in both SK Telecom and MTN Group 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 MTN Group 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 MTN Group Ltd, you can compare the effects of market volatilities on SK Telecom and MTN Group 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 MTN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and MTN Group.
Diversification Opportunities for SK Telecom and MTN Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SKM and MTN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and MTN Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group 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 MTN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of SK Telecom i.e., SK Telecom and MTN Group go up and down completely randomly.
Pair Corralation between SK Telecom and MTN Group
Considering the 90-day investment horizon SK Telecom Co is expected to generate 0.48 times more return on investment than MTN Group. However, SK Telecom Co is 2.09 times less risky than MTN Group. It trades about 0.04 of its potential returns per unit of risk. MTN Group Ltd is currently generating about -0.02 per unit of risk. If you would invest 1,938 in SK Telecom Co on August 27, 2024 and sell it today you would earn a total of 340.00 from holding SK Telecom Co or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co vs. MTN Group Ltd
Performance |
| Timeline |
| SK Telecom |
| MTN Group |
SK Telecom and MTN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and MTN Group
The main advantage of trading using opposite SK Telecom and MTN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, MTN Group 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 MTN Group will offset losses from the drop in MTN Group's long position.| SK Telecom vs. Anterix | SK Telecom vs. Liberty Broadband Corp | SK Telecom vs. Ooma Inc | SK Telecom vs. IDT Corporation |
| MTN Group vs. XL Axiata Tbk | MTN Group vs. Telenor ASA ADR | MTN Group vs. KT Corporation | MTN Group vs. Vodacom Group Ltd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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