Correlation Between SK Telecom and Charter Communications
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on SK Telecom and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Charter Communications.
Diversification Opportunities for SK Telecom and Charter Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SKM and Charter is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of SK Telecom i.e., SK Telecom and Charter Communications go up and down completely randomly.
Pair Corralation between SK Telecom and Charter Communications
Considering the 90-day investment horizon SK Telecom Co is expected to generate 0.54 times more return on investment than Charter Communications. However, SK Telecom Co is 1.84 times less risky than Charter Communications. It trades about -0.13 of its potential returns per unit of risk. Charter Communications is currently generating about -0.23 per unit of risk. If you would invest 2,178 in SK Telecom Co on October 11, 2024 and sell it today you would lose (53.00) from holding SK Telecom Co or give up 2.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SK Telecom Co vs. Charter Communications
Performance |
Timeline |
SK Telecom |
Charter Communications |
SK Telecom and Charter Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK Telecom and Charter Communications
The main advantage of trading using opposite SK Telecom and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.SK Telecom vs. TIM Participacoes SA | SK Telecom vs. PLDT Inc ADR | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Liberty Broadband Srs |
Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications vs. Liberty Broadband Srs |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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