Correlation Between SK Telecom and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both SK Telecom and Invesco QQQ 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 Invesco QQQ 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 Invesco QQQ Trust, you can compare the effects of market volatilities on SK Telecom and Invesco QQQ 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 Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Telecom and Invesco QQQ.
Diversification Opportunities for SK Telecom and Invesco QQQ
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SKM and Invesco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust 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 Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of SK Telecom i.e., SK Telecom and Invesco QQQ go up and down completely randomly.
Pair Corralation between SK Telecom and Invesco QQQ
Considering the 90-day investment horizon SK Telecom Co is expected to under-perform the Invesco QQQ. But the stock apears to be less risky and, when comparing its historical volatility, SK Telecom Co is 1.09 times less risky than Invesco QQQ. The stock trades about -0.01 of its potential returns per unit of risk. The Invesco QQQ Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30,881 in Invesco QQQ Trust on January 19, 2024 and sell it today you would earn a total of 11,703 from holding Invesco QQQ Trust or generate 37.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Telecom Co vs. Invesco QQQ Trust
Performance |
| Timeline |
| SK Telecom |
| Invesco QQQ Trust |
SK Telecom and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Telecom and Invesco QQQ
The main advantage of trading using opposite SK Telecom and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, Invesco QQQ 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 Invesco QQQ will offset losses from the drop in Invesco QQQ's long position.The idea behind SK Telecom Co and Invesco QQQ Trust 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.| Invesco QQQ vs. SPDR SP 500 | Invesco QQQ vs. Vanguard SP 500 | Invesco QQQ vs. NVIDIA | Invesco QQQ vs. SPDR Dow Jones |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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