Correlation Between Dell Technologies and SK Telecom

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

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

Diversification Opportunities for Dell Technologies and SK Telecom

0.15

Correlation Coefficient

Dell Technologies  SK Telecom

Average diversification

The 3 months correlation between Dell and S1KM34 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and SK Telecom Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom Co, and Dell Technologies 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 Dell Technologies 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 Co, has no effect on the direction of Dell Technologies i.e., Dell Technologies and SK Telecom go up and down completely randomly.

Pair Corralation between Dell Technologies and SK Telecom

Assuming the 90 days trading horizon Dell Technologies is expected to generate 1.82 times more return on investment than SK Telecom. However, Dell Technologies is 1.82 times more volatile than SK Telecom Co,. It trades about 0.1 of its potential returns per unit of risk. SK Telecom Co, is currently generating about 0.06 per unit of risk. If you would invest  65,005  in Dell Technologies on October 6, 2024 and sell it today you would earn a total of  9,847  from holding Dell Technologies or generate 15.15% return on investment over 90 days.

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

Dell Technologies  vs.  SK Telecom Co,

Dell Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Dell Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

SK Telecom Co,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, SK Telecom is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dell Technologies and SK Telecom

The main advantage of trading using opposite Dell Technologies and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dell Technologies 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 Dell Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.