Correlation Between SK Telecom and Lict

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

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

Diversification Opportunities for SK Telecom and Lict

0.32

Correlation Coefficient

SK Telecom  Lict

Weak diversification

The 3 months correlation between SKM and Lict is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Lict Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lict 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 Co are associated (or correlated) with Lict. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lict has no effect on the direction of SK Telecom i.e., SK Telecom and Lict go up and down completely randomly.

Pair Corralation between SK Telecom and Lict

If you would invest  1,970,000  in Lict Corporation on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Lict Corporation or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

SK Telecom Co  vs.  Lict Corp.

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.

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.

Pair Trading with SK Telecom and Lict

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

The idea behind SK Telecom Co and Lict Corporation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.