Correlation Between ELMOS SEMICONDUCTOR and SK TELECOM

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and SK TELECOM

0.07

Correlation Coefficient

ELMOS SEMICONDUCTOR  SK TELECOM

Significant diversification

The 3 months correlation between ELMOS and KMBA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and SK TELECOM go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and SK TELECOM

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.39 times more return on investment than SK TELECOM. However, ELMOS SEMICONDUCTOR is 1.39 times more volatile than SK TELECOM TDADR. It trades about 0.1 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.03 per unit of risk. If you would invest  6,600  in ELMOS SEMICONDUCTOR on October 10, 2024 and sell it today you would earn a total of  1,300  from holding ELMOS SEMICONDUCTOR or generate 19.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ELMOS SEMICONDUCTOR  vs.  SK TELECOM TDADR

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ELMOS SEMICONDUCTOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

SK TELECOM TDADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, SK TELECOM is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ELMOS SEMICONDUCTOR and SK TELECOM

The main advantage of trading using opposite ELMOS SEMICONDUCTOR and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.