Correlation Between SK TELECOM and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both SK TELECOM and Sunstone 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 Sunstone 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 Sunstone Hotel Investors, you can compare the effects of market volatilities on SK TELECOM and Sunstone 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 Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Sunstone Hotel.
Diversification Opportunities for SK TELECOM and Sunstone Hotel
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KMBA and Sunstone is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors 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 Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of SK TELECOM i.e., SK TELECOM and Sunstone Hotel go up and down completely randomly.
Pair Corralation between SK TELECOM and Sunstone Hotel
Assuming the 90 days trading horizon SK TELECOM is expected to generate 14.94 times less return on investment than Sunstone Hotel. In addition to that, SK TELECOM is 1.74 times more volatile than Sunstone Hotel Investors. It trades about 0.01 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.14 per unit of volatility. If you would invest 1,151 in Sunstone Hotel Investors on October 12, 2024 and sell it today you would earn a total of 19.00 from holding Sunstone Hotel Investors or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK TELECOM TDADR vs. Sunstone Hotel Investors
Performance |
| Timeline |
| SK TELECOM TDADR |
| Sunstone Hotel Investors |
SK TELECOM and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK TELECOM and Sunstone Hotel
The main advantage of trading using opposite SK TELECOM and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Sunstone 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 Sunstone Hotel will offset losses from the drop in Sunstone 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 |
| Sunstone Hotel vs. The Home Depot | Sunstone Hotel vs. FRACTAL GAMING GROUP | Sunstone Hotel vs. GAMESTOP | Sunstone Hotel vs. Media and Games |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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