Correlation Between SK Telecom and Telephone

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

Diversification Opportunities for SK Telecom and Telephone

0.02

Correlation Coefficient

SK Telecom  Telephone

Significant diversification

The 3 months correlation between SKM and Telephone is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of SK Telecom i.e., SK Telecom and Telephone go up and down completely randomly.

Pair Corralation between SK Telecom and Telephone

Considering the 90-day investment horizon SK Telecom is expected to generate 1.11 times less return on investment than Telephone. But when comparing it to its historical volatility, SK Telecom Co is 1.31 times less risky than Telephone. It trades about 0.07 of its potential returns per unit of risk. Telephone and Data is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,821  in Telephone and Data on August 30, 2024 and sell it today you would earn a total of  103.00  from holding Telephone and Data or generate 5.66% return on investment over 90 days.

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

SK Telecom Co  vs.  Telephone and Data

SK Telecom

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, SK Telecom is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Telephone and Data

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Telephone is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SK Telecom and Telephone

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

The idea behind SK Telecom Co and Telephone and Data 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..