Correlation Between SK Holdings and Robostar CoLtd

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

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

Diversification Opportunities for SK Holdings and Robostar CoLtd

0.7

Correlation Coefficient

SK Holdings  Robostar CoLtd

Poor diversification

The 3 months correlation between 034730 and Robostar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SK Holdings Co and Robostar CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robostar CoLtd and SK Holdings 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 Holdings Co are associated (or correlated) with Robostar CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robostar CoLtd has no effect on the direction of SK Holdings i.e., SK Holdings and Robostar CoLtd go up and down completely randomly.

Pair Corralation between SK Holdings and Robostar CoLtd

Assuming the 90 days trading horizon SK Holdings Co is expected to under-perform the Robostar CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, SK Holdings Co is 1.57 times less risky than Robostar CoLtd. The stock trades about -0.1 of its potential returns per unit of risk. The Robostar CoLtd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,120,000  in Robostar CoLtd on September 23, 2024 and sell it today you would lose (152,000) from holding Robostar CoLtd or give up 7.17% of portfolio value over 90 days.

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

SK Holdings Co  vs.  Robostar CoLtd

SK Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Holdings Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Robostar CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robostar CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SK Holdings and Robostar CoLtd

The main advantage of trading using opposite SK Holdings and Robostar CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Holdings position performs unexpectedly, Robostar CoLtd 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 Robostar CoLtd will offset losses from the drop in Robostar CoLtd's long position.

The idea behind SK Holdings Co and Robostar CoLtd 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.