Correlation Between Sejong Telecom and SK Bioscience

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

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

Diversification Opportunities for Sejong Telecom and SK Bioscience

-0.49

Correlation Coefficient

Sejong Telecom  SK Bioscience

Very good diversification

The 3 months correlation between Sejong and 302440 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience and Sejong 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 Sejong Telecom are associated (or correlated) with SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and SK Bioscience go up and down completely randomly.

Pair Corralation between Sejong Telecom and SK Bioscience

Assuming the 90 days trading horizon Sejong Telecom is expected to generate 0.59 times more return on investment than SK Bioscience. However, Sejong Telecom is 1.68 times less risky than SK Bioscience. It trades about 0.12 of its potential returns per unit of risk. SK Bioscience Co is currently generating about -0.16 per unit of risk. If you would invest  39,400  in Sejong Telecom on December 23, 2024 and sell it today you would earn a total of  3,100  from holding Sejong Telecom or generate 7.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.66%
Values	Daily Returns

Sejong Telecom  vs.  SK Bioscience Co

Sejong Telecom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sejong Telecom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sejong Telecom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SK Bioscience

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sejong Telecom and SK Bioscience

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

The idea behind Sejong Telecom and SK Bioscience 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.