Correlation Between Dalata Hotel and SK TELECOM

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

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

Diversification Opportunities for Dalata Hotel and SK TELECOM

-0.78

Correlation Coefficient

Dalata Hotel  SK TELECOM

Pay attention - limited upside

The 3 months correlation between Dalata and KMBA is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group 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 Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and SK TELECOM go up and down completely randomly.

Pair Corralation between Dalata Hotel and SK TELECOM

Assuming the 90 days horizon Dalata Hotel Group is expected to generate 1.7 times more return on investment than SK TELECOM. However, Dalata Hotel is 1.7 times more volatile than SK TELECOM TDADR. It trades about 0.12 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.04 per unit of risk. If you would invest  461.00  in Dalata Hotel Group on December 28, 2024 and sell it today you would earn a total of  86.00  from holding Dalata Hotel Group or generate 18.66% return on investment over 90 days.

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

Dalata Hotel Group  vs.  SK TELECOM TDADR

Dalata Hotel Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Dalata Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable fundamental drivers, SK TELECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dalata Hotel and SK TELECOM

The main advantage of trading using opposite Dalata Hotel and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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 Dalata Hotel Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.