Correlation Between SK Telecom and Millicom International
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Millicom International 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 Millicom International 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 Millicom International Cellular, you can compare the effects of market volatilities on SK Telecom and Millicom International 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 Millicom International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Millicom International.
Diversification Opportunities for SK Telecom and Millicom International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between SKM and Millicom is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International 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 Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of SK Telecom i.e., SK Telecom and Millicom International go up and down completely randomly.
Pair Corralation between SK Telecom and Millicom International
Considering the 90-day investment horizon SK Telecom is expected to generate 5.73 times less return on investment than Millicom International. But when comparing it to its historical volatility, SK Telecom Co is 2.34 times less risky than Millicom International. It trades about 0.07 of its potential returns per unit of risk. Millicom International Cellular is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,479 in Millicom International Cellular on November 9, 2024 and sell it today you would earn a total of 194.00 from holding Millicom International Cellular or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co vs. Millicom International Cellula
Performance |
| Timeline |
| SK Telecom |
| Millicom International |
SK Telecom and Millicom International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Millicom International
The main advantage of trading using opposite SK Telecom and Millicom International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Millicom International 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 Millicom International will offset losses from the drop in Millicom International'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 |
| Millicom International vs. KT Corporation | Millicom International vs. Telkom Indonesia Tbk | Millicom International vs. SK Telecom Co | Millicom International vs. PLDT Inc ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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