Correlation Between SK TELECOM and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and NH HOTEL 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 NH HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK TELECOM TDADR and NH HOTEL GROUP, you can compare the effects of market volatilities on SK TELECOM and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and NH HOTEL.
Diversification Opportunities for SK TELECOM and NH HOTEL
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KMBA and NH5 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP 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 TDADR are associated (or correlated) with NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of SK TELECOM i.e., SK TELECOM and NH HOTEL go up and down completely randomly.
Pair Corralation between SK TELECOM and NH HOTEL
Assuming the 90 days trading horizon SK TELECOM is expected to generate 343.61 times less return on investment than NH HOTEL. But when comparing it to its historical volatility, SK TELECOM TDADR is 6.78 times less risky than NH HOTEL. It trades about 0.01 of its potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 443.00 in NH HOTEL GROUP on October 12, 2024 and sell it today you would earn a total of 179.00 from holding NH HOTEL GROUP or generate 40.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. NH HOTEL GROUP
Performance |
| Timeline |
| SK TELECOM TDADR |
| NH HOTEL GROUP |
SK TELECOM and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and NH HOTEL
The main advantage of trading using opposite SK TELECOM and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, NH HOTEL 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 NH HOTEL will offset losses from the drop in NH HOTEL's long position.| SK TELECOM vs. ALTAIR RES INC | SK TELECOM vs. Ryanair Holdings plc | SK TELECOM vs. Major Drilling Group | SK TELECOM vs. Micron Technology |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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