Correlation Between Samsung Life and SK Telecom

Can any of the company-specific risk be diversified away by investing in both Samsung Life 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 Samsung Life and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Life Insurance and SK Telecom Co, you can compare the effects of market volatilities on Samsung Life 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 Samsung Life with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and SK Telecom.

Diversification Opportunities for Samsung Life and SK Telecom

0.53

Correlation Coefficient

Samsung Life  SK Telecom

Very weak diversification

The 3 months correlation between Samsung and 017670 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Samsung Life 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 Samsung Life Insurance 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 Samsung Life i.e., Samsung Life and SK Telecom go up and down completely randomly.

Pair Corralation between Samsung Life and SK Telecom

Assuming the 90 days trading horizon Samsung Life Insurance is expected to generate 1.94 times more return on investment than SK Telecom. However, Samsung Life is 1.94 times more volatile than SK Telecom Co. It trades about 0.04 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.07 per unit of risk. If you would invest  8,850,000  in Samsung Life Insurance on September 30, 2024 and sell it today you would earn a total of  870,000  from holding Samsung Life Insurance or generate 9.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Samsung Life Insurance  vs.  SK Telecom Co

Samsung Life Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Life Insurance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SK Telecom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co are ranked lower than 1 (%) 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.

Pair Trading with Samsung Life and SK Telecom

The main advantage of trading using opposite Samsung Life and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life 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.

The idea behind Samsung Life Insurance 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.