Correlation Between XL Axiata and SK Telecom

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

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

Diversification Opportunities for XL Axiata and SK Telecom

0.07

Correlation Coefficient

XL Axiata  SK Telecom

Significant diversification

The 3 months correlation between PTXKY and SKM is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and XL Axiata 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 XL Axiata Tbk 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 XL Axiata i.e., XL Axiata and SK Telecom go up and down completely randomly.

Pair Corralation between XL Axiata and SK Telecom

Assuming the 90 days horizon XL Axiata Tbk is expected to generate 3.64 times more return on investment than SK Telecom. However, XL Axiata is 3.64 times more volatile than SK Telecom Co. It trades about 0.09 of its potential returns per unit of risk. SK Telecom Co is currently generating about -0.16 per unit of risk. If you would invest  256.00  in XL Axiata Tbk on September 26, 2024 and sell it today you would earn a total of  19.00  from holding XL Axiata Tbk or generate 7.42% return on investment over 90 days.

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

XL Axiata Tbk  vs.  SK Telecom Co

XL Axiata Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XL Axiata Tbk 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 inconsistent 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 XL Axiata and SK Telecom

The main advantage of trading using opposite XL Axiata and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XL Axiata 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 XL Axiata Tbk 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.