Correlation Between SK TELECOM and Carmat SA

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

By analyzing existing cross correlation between SK TELECOM TDADR and Carmat SA, you can compare the effects of market volatilities on SK TELECOM and Carmat SA 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 Carmat SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK TELECOM and Carmat SA.

Diversification Opportunities for SK TELECOM and Carmat SA

-0.36

Correlation Coefficient

SK TELECOM  Carmat SA

Very good diversification

The 3 months correlation between KMBA and Carmat is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA 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 TDADR are associated (or correlated) with Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of SK TELECOM i.e., SK TELECOM and Carmat SA go up and down completely randomly.

Pair Corralation between SK TELECOM and Carmat SA

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 0.22 times more return on investment than Carmat SA. However, SK TELECOM TDADR is 4.64 times less risky than Carmat SA. It trades about 0.01 of its potential returns per unit of risk. Carmat SA is currently generating about -0.04 per unit of risk. If you would invest  1,900  in SK TELECOM TDADR on April 16, 2025 and sell it today you would lose (20.00) from holding SK TELECOM TDADR or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.97%
Values	Daily Returns

SK TELECOM TDADR  vs.  Carmat SA

SK TELECOM TDADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SK TELECOM TDADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, SK TELECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carmat SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carmat SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SK TELECOM and Carmat SA

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

The idea behind SK TELECOM TDADR and Carmat SA 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.