Correlation Between SK TELECOM and Targa Resources
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Targa Resources 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 Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK TELECOM TDADR and Targa Resources Corp, you can compare the effects of market volatilities on SK TELECOM and Targa Resources 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 Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Targa Resources.
Diversification Opportunities for SK TELECOM and Targa Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KMBA and Targa is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp 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 TDADR are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of SK TELECOM i.e., SK TELECOM and Targa Resources go up and down completely randomly.
Pair Corralation between SK TELECOM and Targa Resources
Assuming the 90 days trading horizon SK TELECOM is expected to generate 371.75 times less return on investment than Targa Resources. In addition to that, SK TELECOM is 1.3 times more volatile than Targa Resources Corp. It trades about 0.0 of its total potential returns per unit of risk. Targa Resources Corp is currently generating about 0.23 per unit of volatility. If you would invest 13,001 in Targa Resources Corp on September 26, 2024 and sell it today you would earn a total of 4,079 from holding Targa Resources Corp or generate 31.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SK TELECOM TDADR vs. Targa Resources Corp
Performance |
Timeline |
SK TELECOM TDADR |
Targa Resources Corp |
SK TELECOM and Targa Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK TELECOM and Targa Resources
The main advantage of trading using opposite SK TELECOM and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.The idea behind SK TELECOM TDADR and Targa Resources Corp 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.Targa Resources vs. Quaker Chemical | Targa Resources vs. INDO RAMA SYNTHETIC | Targa Resources vs. Perseus Mining Limited | Targa Resources vs. Siamgas And Petrochemicals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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