Correlation Between SK TELECOM and Newmont

Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Newmont 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 Newmont 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 Newmont, you can compare the effects of market volatilities on SK TELECOM and Newmont 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 Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Newmont.

Diversification Opportunities for SK TELECOM and Newmont

-0.11

Correlation Coefficient

SK TELECOM  Newmont

Good diversification

The 3 months correlation between KMBA and Newmont is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of SK TELECOM i.e., SK TELECOM and Newmont go up and down completely randomly.

Pair Corralation between SK TELECOM and Newmont

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to under-perform the Newmont. But the stock apears to be less risky and, when comparing its historical volatility, SK TELECOM TDADR is 1.35 times less risky than Newmont. The stock trades about -0.09 of its potential returns per unit of risk. The Newmont is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest  3,641  in Newmont on October 25, 2024 and sell it today you would earn a total of  437.00  from holding Newmont or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

SK TELECOM TDADR  vs.  Newmont

SK TELECOM TDADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, SK TELECOM is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SK TELECOM and Newmont

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

The idea behind SK TELECOM TDADR and Newmont 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.