Correlation Between SK TELECOM and CSSC Offshore

Can any of the company-specific risk be diversified away by investing in both SK TELECOM and CSSC Offshore 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 CSSC Offshore 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 CSSC Offshore Marine, you can compare the effects of market volatilities on SK TELECOM and CSSC Offshore 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 CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and CSSC Offshore.

Diversification Opportunities for SK TELECOM and CSSC Offshore

-0.42

Correlation Coefficient

SK TELECOM  CSSC Offshore

Very good diversification

The 3 months correlation between KMBA and CSSC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine 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 CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of SK TELECOM i.e., SK TELECOM and CSSC Offshore go up and down completely randomly.

Pair Corralation between SK TELECOM and CSSC Offshore

Assuming the 90 days trading horizon SK TELECOM is expected to generate 3.52 times less return on investment than CSSC Offshore. But when comparing it to its historical volatility, SK TELECOM TDADR is 1.58 times less risky than CSSC Offshore. It trades about 0.02 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  86.00  in CSSC Offshore Marine on September 26, 2024 and sell it today you would earn a total of  49.00  from holding CSSC Offshore Marine or generate 56.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.86%
Values	Daily Returns

SK TELECOM TDADR  vs.  CSSC Offshore Marine

SK TELECOM TDADR

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CSSC Offshore Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSSC Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CSSC Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SK TELECOM and CSSC Offshore

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

The idea behind SK TELECOM TDADR and CSSC Offshore Marine 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..