Correlation Between SK Telecom and US Bancorp
Can any of the company-specific risk be diversified away by investing in both SK Telecom and US Bancorp 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 US Bancorp 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 US Bancorp, you can compare the effects of market volatilities on SK Telecom and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and US Bancorp.
Diversification Opportunities for SK Telecom and US Bancorp
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SKM and USB is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of SK Telecom i.e., SK Telecom and US Bancorp go up and down completely randomly.
Pair Corralation between SK Telecom and US Bancorp
Considering the 90-day investment horizon SK Telecom is expected to generate 1.43 times less return on investment than US Bancorp. But when comparing it to its historical volatility, SK Telecom Co is 1.7 times less risky than US Bancorp. It trades about 0.03 of its potential returns per unit of risk. US Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,177 in US Bancorp on September 26, 2024 and sell it today you would earn a total of 706.00 from holding US Bancorp or generate 16.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SK Telecom Co vs. US Bancorp
Performance |
Timeline |
SK Telecom |
US Bancorp |
SK Telecom and US Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK Telecom and US Bancorp
The main advantage of trading using opposite SK Telecom and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.SK Telecom vs. PLDT Inc ADR | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Telefonica Brasil SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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