Correlation Between SK Telecom and Woori Financial
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Woori Financial 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 Woori Financial 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 Woori Financial Group, you can compare the effects of market volatilities on SK Telecom and Woori Financial 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 Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Woori Financial.
Diversification Opportunities for SK Telecom and Woori Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SKM and Woori is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of SK Telecom i.e., SK Telecom and Woori Financial go up and down completely randomly.
Pair Corralation between SK Telecom and Woori Financial
Considering the 90-day investment horizon SK Telecom is expected to generate 1.89 times less return on investment than Woori Financial. But when comparing it to its historical volatility, SK Telecom Co is 1.37 times less risky than Woori Financial. It trades about 0.02 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,750 in Woori Financial Group on October 13, 2024 and sell it today you would earn a total of 391.00 from holding Woori Financial Group or generate 14.22% 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. Woori Financial Group
Performance |
| Timeline |
| SK Telecom |
| Woori Financial Group |
SK Telecom and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Woori Financial
The main advantage of trading using opposite SK Telecom and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Woori Financial 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 Woori Financial will offset losses from the drop in Woori Financial'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 |
| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. KB Financial Group | Woori Financial vs. Banco De Chile | Woori Financial vs. Orix Corp Ads |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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