Correlation Between Mhlbauer Holding and SK TELECOM

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

By analyzing existing cross correlation between Mhlbauer Holding AG and SK TELECOM TDADR, you can compare the effects of market volatilities on Mhlbauer Holding and SK TELECOM 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 Mhlbauer Holding with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mhlbauer Holding and SK TELECOM.

Diversification Opportunities for Mhlbauer Holding and SK TELECOM

-0.12

Correlation Coefficient

Mhlbauer Holding  SK TELECOM

Good diversification

The 3 months correlation between Mhlbauer and KMBA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mhlbauer Holding AG and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR and Mhlbauer Holding 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 Mhlbauer Holding AG are associated (or correlated) with SK TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK TELECOM TDADR has no effect on the direction of Mhlbauer Holding i.e., Mhlbauer Holding and SK TELECOM go up and down completely randomly.

Pair Corralation between Mhlbauer Holding and SK TELECOM

Assuming the 90 days trading horizon Mhlbauer Holding AG is expected to under-perform the SK TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, Mhlbauer Holding AG is 1.33 times less risky than SK TELECOM. The stock trades about -0.22 of its potential returns per unit of risk. The SK TELECOM TDADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,920  in SK TELECOM TDADR on September 3, 2024 and sell it today you would earn a total of  340.00  from holding SK TELECOM TDADR or generate 17.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mhlbauer Holding AG  vs.  SK TELECOM TDADR

Mhlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SK TELECOM TDADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, SK TELECOM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mhlbauer Holding and SK TELECOM

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

The idea behind Mhlbauer Holding AG and SK TELECOM TDADR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.