Correlation Between SK TELECOM and Dalata Hotel

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

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

Diversification Opportunities for SK TELECOM and Dalata Hotel

-0.76

Correlation Coefficient

SK TELECOM  Dalata Hotel

Pay attention - limited upside

The 3 months correlation between KMBA and Dalata is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and SK TELECOM 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 SK TELECOM TDADR are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of SK TELECOM i.e., SK TELECOM and Dalata Hotel go up and down completely randomly.

Pair Corralation between SK TELECOM and Dalata Hotel

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to under-perform the Dalata Hotel. But the stock apears to be less risky and, when comparing its historical volatility, SK TELECOM TDADR is 1.72 times less risky than Dalata Hotel. The stock trades about -0.03 of its potential returns per unit of risk. The Dalata Hotel Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  459.00  in Dalata Hotel Group on December 26, 2024 and sell it today you would earn a total of  91.00  from holding Dalata Hotel Group or generate 19.83% return on investment over 90 days.

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

SK TELECOM TDADR  vs.  Dalata Hotel Group

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.

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 fragile basic indicators, Dalata Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SK TELECOM and Dalata Hotel

The main advantage of trading using opposite SK TELECOM and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK TELECOM position performs unexpectedly, Dalata Hotel 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 Dalata Hotel will offset losses from the drop in Dalata Hotel's long position.

The idea behind SK TELECOM TDADR and Dalata Hotel Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.