Correlation Between SK Telecom and WideOpenWest

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

Diversification Opportunities for SK Telecom and WideOpenWest

0.18

Correlation Coefficient

SK Telecom  WideOpenWest

Average diversification

The 3 months correlation between SKM and WideOpenWest is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and WideOpenWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WideOpenWest 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 WideOpenWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WideOpenWest has no effect on the direction of SK Telecom i.e., SK Telecom and WideOpenWest go up and down completely randomly.

Pair Corralation between SK Telecom and WideOpenWest

Considering the 90-day investment horizon SK Telecom is expected to generate 69.0 times less return on investment than WideOpenWest. But when comparing it to its historical volatility, SK Telecom Co is 2.33 times less risky than WideOpenWest. It trades about 0.0 of its potential returns per unit of risk. WideOpenWest is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  480.00  in WideOpenWest on December 29, 2024 and sell it today you would earn a total of  22.00  from holding WideOpenWest or generate 4.58% 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.  WideOpenWest

SK Telecom

Risk-Adjusted Performance

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 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.

WideOpenWest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WideOpenWest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, WideOpenWest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SK Telecom and WideOpenWest

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

The idea behind SK Telecom Co and WideOpenWest 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.