Correlation Between A Tech and SK Telecom

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

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

Diversification Opportunities for A Tech and SK Telecom

0.18

Correlation Coefficient

A Tech  SK Telecom

Average diversification

The 3 months correlation between 071670 and 017670 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and A Tech 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 A Tech Solution Co 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 A Tech i.e., A Tech and SK Telecom go up and down completely randomly.

Pair Corralation between A Tech and SK Telecom

Assuming the 90 days trading horizon A Tech Solution Co is expected to generate 2.25 times more return on investment than SK Telecom. However, A Tech is 2.25 times more volatile than SK Telecom Co. It trades about 0.07 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.02 per unit of risk. If you would invest  549,000  in A Tech Solution Co on December 23, 2024 and sell it today you would earn a total of  47,000  from holding A Tech Solution Co or generate 8.56% return on investment over 90 days.

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

A Tech Solution Co  vs.  SK Telecom Co

A Tech Solution

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in A Tech Solution Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, A Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SK Telecom

Risk-Adjusted Performance

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 A Tech and SK Telecom

The main advantage of trading using opposite A Tech and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Tech 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 A Tech Solution Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.