Correlation Between SK Telecom and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband Corp, you can compare the effects of market volatilities on SK Telecom and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Liberty Broadband.
Diversification Opportunities for SK Telecom and Liberty Broadband
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SKM and Liberty is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Liberty Broadband Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Co are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Corp has no effect on the direction of SK Telecom i.e., SK Telecom and Liberty Broadband go up and down completely randomly.
Pair Corralation between SK Telecom and Liberty Broadband
Considering the 90-day investment horizon SK Telecom Co is expected to generate 3.17 times more return on investment than Liberty Broadband. However, SK Telecom is 3.17 times more volatile than Liberty Broadband Corp. It trades about 0.2 of its potential returns per unit of risk. Liberty Broadband Corp is currently generating about 0.1 per unit of risk. If you would invest 2,280 in SK Telecom Co on August 30, 2024 and sell it today you would earn a total of 147.00 from holding SK Telecom Co or generate 6.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SK Telecom Co vs. Liberty Broadband Corp
Performance |
Timeline |
SK Telecom |
Liberty Broadband Corp |
SK Telecom and Liberty Broadband Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK Telecom and Liberty Broadband
The main advantage of trading using opposite SK Telecom and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.SK Telecom vs. TIM Participacoes SA | SK Telecom vs. PLDT Inc ADR | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Liberty Broadband Srs |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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