Correlation Between Banco De and SK Telecom

Can any of the company-specific risk be diversified away by investing in both Banco De 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 Banco De and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco De Chile and SK Telecom Co, you can compare the effects of market volatilities on Banco De 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 Banco De with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and SK Telecom.

Diversification Opportunities for Banco De and SK Telecom

0.48

Correlation Coefficient

Banco De  SK Telecom

Very weak diversification

The 3 months correlation between Banco and SKM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Banco De 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 Banco De Chile 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 Banco De i.e., Banco De and SK Telecom go up and down completely randomly.

Pair Corralation between Banco De and SK Telecom

Considering the 90-day investment horizon Banco De Chile is expected to generate 1.1 times more return on investment than SK Telecom. However, Banco De is 1.1 times more volatile than SK Telecom Co. It trades about 0.06 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.02 per unit of risk. If you would invest  2,046  in Banco De Chile on October 24, 2024 and sell it today you would earn a total of  369.00  from holding Banco De Chile or generate 18.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Banco De Chile  vs.  SK Telecom Co

Banco De Chile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco De Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Banco De is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

SK Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Telecom Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Banco De and SK Telecom

The main advantage of trading using opposite Banco De and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De 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.

The idea behind Banco De Chile and SK Telecom Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.