Correlation Between Xavis and SK Telecom

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

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

Diversification Opportunities for Xavis and SK Telecom

0.51

Correlation Coefficient

Xavis  SK Telecom

Very weak diversification

The 3 months correlation between Xavis and 017670 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xavis 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 Xavis 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 Xavis 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 Xavis i.e., Xavis and SK Telecom go up and down completely randomly.

Pair Corralation between Xavis and SK Telecom

Assuming the 90 days trading horizon Xavis Co is expected to generate 4.37 times more return on investment than SK Telecom. However, Xavis is 4.37 times more volatile than SK Telecom Co. It trades about 0.1 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  127,900  in Xavis Co on December 24, 2024 and sell it today you would earn a total of  30,200  from holding Xavis Co or generate 23.61% return on investment over 90 days.

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

Xavis Co  vs.  SK Telecom Co

Xavis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xavis Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xavis sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Xavis and SK Telecom

The main advantage of trading using opposite Xavis and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis 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 Xavis 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.