Correlation Between BURLINGTON STORES and SK TELECOM

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

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

Diversification Opportunities for BURLINGTON STORES and SK TELECOM

0.28

Correlation Coefficient

BURLINGTON STORES  SK TELECOM

Modest diversification

The 3 months correlation between BURLINGTON and KMBA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR and BURLINGTON STORES 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 BURLINGTON STORES 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 TDADR has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and SK TELECOM go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and SK TELECOM

Assuming the 90 days trading horizon BURLINGTON STORES is expected to under-perform the SK TELECOM. In addition to that, BURLINGTON STORES is 1.64 times more volatile than SK TELECOM TDADR. It trades about -0.13 of its total potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.08 per unit of volatility. If you would invest  2,040  in SK TELECOM TDADR on December 22, 2024 and sell it today you would lose (160.00) from holding SK TELECOM TDADR or give up 7.84% of portfolio value over 90 days.

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

BURLINGTON STORES  vs.  SK TELECOM TDADR

BURLINGTON STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days BURLINGTON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SK TELECOM TDADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SK TELECOM TDADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BURLINGTON STORES and SK TELECOM

The main advantage of trading using opposite BURLINGTON STORES and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES 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 BURLINGTON STORES and SK TELECOM TDADR 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.