Correlation Between Tower One and SK TELECOM

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

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

Diversification Opportunities for Tower One and SK TELECOM

0.0

Correlation Coefficient

Tower One  SK TELECOM

Pay attention - limited upside

The 3 months correlation between Tower and KMBA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tower One Wireless 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 Tower One 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 Tower One Wireless 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 Tower One i.e., Tower One and SK TELECOM go up and down completely randomly.

Pair Corralation between Tower One and SK TELECOM

Assuming the 90 days trading horizon Tower One Wireless is expected to under-perform the SK TELECOM. In addition to that, Tower One is 1.49 times more volatile than SK TELECOM TDADR. It trades about 0.0 of its total potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.03 per unit of volatility. If you would invest  1,883  in SK TELECOM TDADR on September 5, 2024 and sell it today you would earn a total of  357.00  from holding SK TELECOM TDADR or generate 18.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Tower One Wireless  vs.  SK TELECOM TDADR

Tower One Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tower One Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tower One is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SK TELECOM TDADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, SK TELECOM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tower One and SK TELECOM

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

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.