Correlation Between Lict and SK Telecom

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

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

Diversification Opportunities for Lict and SK Telecom

0.0

Correlation Coefficient

Lict  SK Telecom

Pay attention - limited upside

The 3 months correlation between Lict and SKM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lict Corp. and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Lict 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 Lict Corporation 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 has no effect on the direction of Lict i.e., Lict and SK Telecom go up and down completely randomly.

Pair Corralation between Lict and SK Telecom

Given the investment horizon of 90 days Lict Corporation is expected to under-perform the SK Telecom. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lict Corporation is 1.48 times less risky than SK Telecom. The pink sheet trades about -0.15 of its potential returns per unit of risk. The SK Telecom Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,809  in SK Telecom Co on October 26, 2024 and sell it today you would earn a total of  327.00  from holding SK Telecom Co or generate 18.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.81%
Values	Daily Returns

Lict Corp.  vs.  SK Telecom Co

Lict

Risk-Adjusted Performance

0 of 100

Very Weak

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

SK Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Telecom Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Lict and SK Telecom

The main advantage of trading using opposite Lict and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lict 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 Lict Corporation and SK Telecom Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.