Correlation Between SK Telecom and TAEYANG

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

Diversification Opportunities for SK Telecom and TAEYANG

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between 017670 and TAEYANG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and TAEYANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAEYANG 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 TAEYANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAEYANG has no effect on the direction of SK Telecom i.e., SK Telecom and TAEYANG go up and down completely randomly.

Pair Corralation between SK Telecom and TAEYANG

Assuming the 90 days trading horizon SK Telecom Co is expected to generate 0.96 times more return on investment than TAEYANG. However, SK Telecom Co is 1.04 times less risky than TAEYANG. It trades about 0.06 of its potential returns per unit of risk. TAEYANG is currently generating about -0.02 per unit of risk. If you would invest  4,095,636  in SK Telecom Co on October 16, 2024 and sell it today you would earn a total of  1,504,364  from holding SK Telecom Co or generate 36.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SK Telecom Co  vs.  TAEYANG

 Performance 
       Timeline  
SK Telecom 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SK Telecom Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SK Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
TAEYANG 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in TAEYANG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TAEYANG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SK Telecom and TAEYANG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SK Telecom and TAEYANG

The main advantage of trading using opposite SK Telecom and TAEYANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom position performs unexpectedly, TAEYANG 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 TAEYANG will offset losses from the drop in TAEYANG's long position.
The idea behind SK Telecom Co and TAEYANG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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