Correlation Between SK Telecom and Access Power

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

Diversification Opportunities for SK Telecom and Access Power

0.07

Correlation Coefficient

SK Telecom  Access Power

Significant diversification

The 3 months correlation between SKM and Access is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co and Access Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Access Power 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 Access Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Access Power has no effect on the direction of SK Telecom i.e., SK Telecom and Access Power go up and down completely randomly.

Pair Corralation between SK Telecom and Access Power

Considering the 90-day investment horizon SK Telecom Co is expected to under-perform the Access Power. But the stock apears to be less risky and, when comparing its historical volatility, SK Telecom Co is 23.44 times less risky than Access Power. The stock trades about -0.13 of its potential returns per unit of risk. The Access Power Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.16  in Access Power Co on September 22, 2024 and sell it today you would lose (0.02) from holding Access Power Co or give up 12.5% of portfolio value over 90 days.

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

SK Telecom Co  vs.  Access Power Co

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 latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Access Power

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Access Power Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Access Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SK Telecom and Access Power

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

The idea behind SK Telecom Co and Access Power 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.