Correlation Between SK Telecom and America Movil

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

Diversification Opportunities for SK Telecom and America Movil

0.45

Correlation Coefficient

SK Telecom  America Movil

Very weak diversification

The 3 months correlation between SKM and America is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and America Movil SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Movil SAB 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 America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Movil SAB has no effect on the direction of SK Telecom i.e., SK Telecom and America Movil go up and down completely randomly.

Pair Corralation between SK Telecom and America Movil

Considering the 90-day investment horizon SK Telecom Co is expected to generate 0.82 times more return on investment than America Movil. However, SK Telecom Co is 1.22 times less risky than America Movil. It trades about 0.05 of its potential returns per unit of risk. America Movil SAB is currently generating about -0.02 per unit of risk. If you would invest  1,901  in SK Telecom Co on August 31, 2024 and sell it today you would earn a total of  521.00  from holding SK Telecom Co or generate 27.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

SK Telecom Co  vs.  America Movil SAB

SK Telecom

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, SK Telecom is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

America Movil SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Movil SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SK Telecom and America Movil

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

The idea behind SK Telecom Co and America Movil SAB 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.