Correlation Between SK TELECOM and Mhlbauer Holding

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

By analyzing existing cross correlation between SK TELECOM TDADR and Mhlbauer Holding AG, you can compare the effects of market volatilities on SK TELECOM and Mhlbauer Holding 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 Mhlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Mhlbauer Holding.

Diversification Opportunities for SK TELECOM and Mhlbauer Holding

-0.15

Correlation Coefficient

SK TELECOM  Mhlbauer Holding

Good diversification

The 3 months correlation between KMBA and Mhlbauer is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mhlbauer Holding 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 TDADR are associated (or correlated) with Mhlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mhlbauer Holding has no effect on the direction of SK TELECOM i.e., SK TELECOM and Mhlbauer Holding go up and down completely randomly.

Pair Corralation between SK TELECOM and Mhlbauer Holding

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 1.34 times more return on investment than Mhlbauer Holding. However, SK TELECOM is 1.34 times more volatile than Mhlbauer Holding AG. It trades about 0.09 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.23 per unit of risk. If you would invest  2,000  in SK TELECOM TDADR on September 4, 2024 and sell it today you would earn a total of  260.00  from holding SK TELECOM TDADR or generate 13.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SK TELECOM TDADR  vs.  Mhlbauer Holding AG

SK TELECOM TDADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, SK TELECOM reported solid returns over the last few months and may actually be approaching a breakup point.

Mhlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SK TELECOM and Mhlbauer Holding

The main advantage of trading using opposite SK TELECOM and Mhlbauer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Mhlbauer Holding 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 Mhlbauer Holding will offset losses from the drop in Mhlbauer Holding's long position.

The idea behind SK TELECOM TDADR and Mhlbauer Holding AG 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.