Correlation Between CTS Eventim and SK TELECOM

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

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

Diversification Opportunities for CTS Eventim and SK TELECOM

-0.29

Correlation Coefficient

CTS Eventim  SK TELECOM

Very good diversification

The 3 months correlation between CTS and KMBA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CTS Eventim AG 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 CTS Eventim 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 CTS Eventim AG 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 CTS Eventim i.e., CTS Eventim and SK TELECOM go up and down completely randomly.

Pair Corralation between CTS Eventim and SK TELECOM

Assuming the 90 days trading horizon CTS Eventim is expected to generate 7.0 times less return on investment than SK TELECOM. But when comparing it to its historical volatility, CTS Eventim AG is 1.19 times less risky than SK TELECOM. It trades about 0.01 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  2,060  in SK TELECOM TDADR on September 5, 2024 and sell it today you would earn a total of  180.00  from holding SK TELECOM TDADR or generate 8.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CTS Eventim AG  vs.  SK TELECOM TDADR

CTS Eventim AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTS Eventim AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, CTS Eventim 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 CTS Eventim and SK TELECOM

The main advantage of trading using opposite CTS Eventim and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS Eventim 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 CTS Eventim AG 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.