Correlation Between Newell Brands and SK Telecom

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

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

Diversification Opportunities for Newell Brands and SK Telecom

0.2

Correlation Coefficient

Newell Brands  SK Telecom

Modest diversification

The 3 months correlation between Newell and S1KM34 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands 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 Newell Brands 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 Newell Brands 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 Newell Brands i.e., Newell Brands and SK Telecom go up and down completely randomly.

Pair Corralation between Newell Brands and SK Telecom

Assuming the 90 days trading horizon Newell Brands is expected to under-perform the SK Telecom. In addition to that, Newell Brands is 2.64 times more volatile than SK Telecom Co,. It trades about -0.17 of its total potential returns per unit of risk. SK Telecom Co, is currently generating about -0.06 per unit of volatility. If you would invest  3,302  in SK Telecom Co, on December 24, 2024 and sell it today you would lose (236.00) from holding SK Telecom Co, or give up 7.15% of portfolio value over 90 days.

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

Newell Brands  vs.  SK Telecom Co,

Newell Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SK Telecom Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days SK Telecom Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Newell Brands and SK Telecom

The main advantage of trading using opposite Newell Brands and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands 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 Newell Brands 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.