Correlation Between SK Telecom and Pettenati

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

By analyzing existing cross correlation between SK Telecom Co, and Pettenati SA Industria, you can compare the effects of market volatilities on SK Telecom and Pettenati 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 Pettenati. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Pettenati.

Diversification Opportunities for SK Telecom and Pettenati

-0.01

Correlation Coefficient

SK Telecom  Pettenati

Good diversification

The 3 months correlation between S1KM34 and Pettenati is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Pettenati SA Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pettenati SA Industria 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 Co, are associated (or correlated) with Pettenati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pettenati SA Industria has no effect on the direction of SK Telecom i.e., SK Telecom and Pettenati go up and down completely randomly.

Pair Corralation between SK Telecom and Pettenati

Assuming the 90 days trading horizon SK Telecom Co, is expected to generate 0.63 times more return on investment than Pettenati. However, SK Telecom Co, is 1.59 times less risky than Pettenati. It trades about -0.13 of its potential returns per unit of risk. Pettenati SA Industria is currently generating about -0.11 per unit of risk. If you would invest  3,345  in SK Telecom Co, on October 22, 2024 and sell it today you would lose (144.00) from holding SK Telecom Co, or give up 4.3% of portfolio value over 90 days.

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

SK Telecom Co,  vs.  Pettenati SA Industria

SK Telecom Co,

Risk-Adjusted Performance

0 of 100

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 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.

Pettenati SA Industria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pettenati SA Industria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 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 Pettenati

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

The idea behind SK Telecom Co, and Pettenati SA Industria 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.