Correlation Between Advanced Info and SK Telecom

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

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

Diversification Opportunities for Advanced Info and SK Telecom

0.35

Correlation Coefficient

Advanced Info  SK Telecom

Weak diversification

The 3 months correlation between Advanced and SKM is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Advanced Info 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 Advanced Info Service 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 Advanced Info i.e., Advanced Info and SK Telecom go up and down completely randomly.

Pair Corralation between Advanced Info and SK Telecom

Assuming the 90 days horizon Advanced Info Service is expected to generate 2.86 times more return on investment than SK Telecom. However, Advanced Info is 2.86 times more volatile than SK Telecom Co. It trades about 0.03 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.0 per unit of risk. If you would invest  550.00  in Advanced Info Service on March 7, 2024 and sell it today you would earn a total of  5.00  from holding Advanced Info Service or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Advanced Info Service  vs.  SK Telecom Co

Advanced Info Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Info Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Advanced Info is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 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.

Pair Trading with Advanced Info and SK Telecom

The main advantage of trading using opposite Advanced Info and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Info 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 Advanced Info Service 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.