Correlation Between Verizon Communications and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and SK Telecom 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 Verizon Communications and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and SK Telecom Co, you can compare the effects of market volatilities on Verizon Communications and SK Telecom 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 Verizon Communications with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and SK Telecom.
Diversification Opportunities for Verizon Communications and SK Telecom
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Verizon and SKM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Verizon Communications 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 Verizon Communications are associated (or correlated) with SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of Verizon Communications i.e., Verizon Communications and SK Telecom go up and down completely randomly.
Pair Corralation between Verizon Communications and SK Telecom
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.12 times more return on investment than SK Telecom. However, Verizon Communications is 1.12 times more volatile than SK Telecom Co. It trades about 0.23 of its potential returns per unit of risk. SK Telecom Co is currently generating about -0.04 per unit of risk. If you would invest 4,162 in Verizon Communications on August 27, 2024 and sell it today you would earn a total of 236.00 from holding Verizon Communications or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. SK Telecom Co
Performance |
| Timeline |
| Verizon Communications |
| SK Telecom |
Verizon Communications and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and SK Telecom
The main advantage of trading using opposite Verizon Communications and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, SK Telecom 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 SK Telecom will offset losses from the drop in SK Telecom's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
| SK Telecom vs. Anterix | SK Telecom vs. Liberty Broadband Corp | SK Telecom vs. Ooma Inc | SK Telecom vs. IDT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |