Correlation Between SK TELECOM and HEXINDO ADIPERKASA

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

Diversification Opportunities for SK TELECOM and HEXINDO ADIPERKASA

-0.42

Correlation Coefficient

SK TELECOM  HEXINDO ADIPERKASA

Very good diversification

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

Pair Corralation between SK TELECOM and HEXINDO ADIPERKASA

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 2.9 times more return on investment than HEXINDO ADIPERKASA. However, SK TELECOM is 2.9 times more volatile than HEXINDO ADIPERKASA. It trades about 0.05 of its potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about -0.33 per unit of risk. If you would invest  1,930  in SK TELECOM TDADR on October 6, 2024 and sell it today you would earn a total of  90.00  from holding SK TELECOM TDADR or generate 4.66% return on investment over 90 days.

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

SK TELECOM TDADR  vs.  HEXINDO ADIPERKASA

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

HEXINDO ADIPERKASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SK TELECOM and HEXINDO ADIPERKASA

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

The idea behind SK TELECOM TDADR and HEXINDO ADIPERKASA 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..