Correlation Between SK Telecom and Shenandoah Telecommunicatio

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

Diversification Opportunities for SK Telecom and Shenandoah Telecommunicatio

0.72

Correlation Coefficient

SK Telecom  Shenandoah Telecommunicatio

Poor diversification

The 3 months correlation between SKM and Shenandoah is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of SK Telecom i.e., SK Telecom and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between SK Telecom and Shenandoah Telecommunicatio

Considering the 90-day investment horizon SK Telecom Co is expected to under-perform the Shenandoah Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, SK Telecom Co is 2.62 times less risky than Shenandoah Telecommunicatio. The stock trades about -0.05 of its potential returns per unit of risk. The Shenandoah Telecommunications Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,851  in Shenandoah Telecommunications Co on March 7, 2024 and sell it today you would earn a total of  25.00  from holding Shenandoah Telecommunications Co or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

SK Telecom Co  vs.  Shenandoah Telecommunications

SK Telecom

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. In spite of very healthy forward-looking signals, SK Telecom is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SK Telecom and Shenandoah Telecommunicatio

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

The idea behind SK Telecom Co and Shenandoah Telecommunications 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.