Correlation Between THAI BEVERAGE and SK TELECOM

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

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

Diversification Opportunities for THAI BEVERAGE and SK TELECOM

0.52

Correlation Coefficient

THAI BEVERAGE  SK TELECOM

Very weak diversification

The 3 months correlation between THAI and KMBA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE i.e., THAI BEVERAGE and SK TELECOM go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and SK TELECOM

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.09 times less return on investment than SK TELECOM. But when comparing it to its historical volatility, THAI BEVERAGE is 1.13 times less risky than SK TELECOM. It trades about 0.06 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,040  in SK TELECOM TDADR on September 19, 2024 and sell it today you would earn a total of  60.00  from holding SK TELECOM TDADR or generate 2.94% return on investment over 90 days.

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

THAI BEVERAGE  vs.  SK TELECOM TDADR

THAI BEVERAGE

Risk-Adjusted Performance

3 of 100

Insignificant

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

SK TELECOM TDADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK TELECOM TDADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, SK TELECOM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THAI BEVERAGE and SK TELECOM

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

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.