Correlation Between MIRAMAR HOTEL and SK TELECOM

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

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

Diversification Opportunities for MIRAMAR HOTEL and SK TELECOM

-0.15

Correlation Coefficient

MIRAMAR HOTEL  SK TELECOM

Good diversification

The 3 months correlation between MIRAMAR and KMBA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MIRAMAR HOTEL INV 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 MIRAMAR HOTEL 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 MIRAMAR HOTEL INV 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 MIRAMAR HOTEL i.e., MIRAMAR HOTEL and SK TELECOM go up and down completely randomly.

Pair Corralation between MIRAMAR HOTEL and SK TELECOM

Assuming the 90 days trading horizon MIRAMAR HOTEL INV is expected to generate 1.31 times more return on investment than SK TELECOM. However, MIRAMAR HOTEL is 1.31 times more volatile than SK TELECOM TDADR. It trades about 0.13 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.09 per unit of risk. If you would invest  87.00  in MIRAMAR HOTEL INV on September 4, 2024 and sell it today you would earn a total of  25.00  from holding MIRAMAR HOTEL INV or generate 28.74% return on investment over 90 days.

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

MIRAMAR HOTEL INV  vs.  SK TELECOM TDADR

MIRAMAR HOTEL INV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MIRAMAR HOTEL INV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, MIRAMAR HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

SK TELECOM TDADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, SK TELECOM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MIRAMAR HOTEL and SK TELECOM

The main advantage of trading using opposite MIRAMAR HOTEL and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIRAMAR HOTEL 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 MIRAMAR HOTEL INV 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.