Correlation Between SS TECH and SK Telecom

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Can any of the company-specific risk be diversified away by investing in both SS TECH 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 SS TECH and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SS TECH and SK Telecom Co, you can compare the effects of market volatilities on SS TECH 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 SS TECH with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SS TECH and SK Telecom.

Diversification Opportunities for SS TECH and SK Telecom

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 101490 and 017670 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and SS TECH 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 SS TECH 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 has no effect on the direction of SS TECH i.e., SS TECH and SK Telecom go up and down completely randomly.

Pair Corralation between SS TECH and SK Telecom

Assuming the 90 days trading horizon SS TECH is expected to generate 16.75 times less return on investment than SK Telecom. In addition to that, SS TECH is 3.22 times more volatile than SK Telecom Co. It trades about 0.0 of its total potential returns per unit of risk. SK Telecom Co is currently generating about 0.08 per unit of volatility. If you would invest  4,108,962  in SK Telecom Co on August 27, 2024 and sell it today you would earn a total of  1,611,038  from holding SK Telecom Co or generate 39.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SS TECH  vs.  SK Telecom Co

 Performance 
       Timeline  
SS TECH 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SS TECH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
SK Telecom 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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. 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.

SS TECH and SK Telecom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SS TECH and SK Telecom

The main advantage of trading using opposite SS TECH and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS TECH 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.
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The idea behind SS TECH and SK Telecom Co 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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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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