Correlation Between JB Hunt and SK Telecom

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

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

Diversification Opportunities for JB Hunt and SK Telecom

0.49

Correlation Coefficient

JB Hunt  SK Telecom

Very weak diversification

The 3 months correlation between J1BH34 and S1KM34 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport 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 JB Hunt 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 JB Hunt Transport 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 JB Hunt i.e., JB Hunt and SK Telecom go up and down completely randomly.

Pair Corralation between JB Hunt and SK Telecom

Assuming the 90 days trading horizon JB Hunt is expected to generate 29.83 times less return on investment than SK Telecom. But when comparing it to its historical volatility, JB Hunt Transport is 64.87 times less risky than SK Telecom. It trades about 0.13 of its potential returns per unit of risk. SK Telecom Co, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,171  in SK Telecom Co, on October 8, 2024 and sell it today you would earn a total of  150.00  from holding SK Telecom Co, or generate 4.73% return on investment over 90 days.

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

JB Hunt Transport  vs.  SK Telecom Co,

JB Hunt Transport

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, JB Hunt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JB Hunt and SK Telecom

The main advantage of trading using opposite JB Hunt and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt 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 JB Hunt Transport 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.