Correlation Between SK Telecom and Wing Yip

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

Diversification Opportunities for SK Telecom and Wing Yip

0.21

Correlation Coefficient

SK Telecom  Wing Yip

Modest diversification

The 3 months correlation between 017670 and Wing is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of SK Telecom i.e., SK Telecom and Wing Yip go up and down completely randomly.

Pair Corralation between SK Telecom and Wing Yip

Assuming the 90 days trading horizon SK Telecom is expected to generate 3.79 times less return on investment than Wing Yip. But when comparing it to its historical volatility, SK Telecom Co is 5.92 times less risky than Wing Yip. It trades about 0.02 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  191,700  in Wing Yip Food on September 29, 2024 and sell it today you would lose (23,800) from holding Wing Yip Food or give up 12.42% of portfolio value over 90 days.

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

SK Telecom Co  vs.  Wing Yip Food

SK Telecom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SK Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wing Yip Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wing Yip Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wing Yip is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SK Telecom and Wing Yip

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

The idea behind SK Telecom Co and Wing Yip Food 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .