Correlation Between SK TELECOM and EMPEROR ENT

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

Diversification Opportunities for SK TELECOM and EMPEROR ENT

-0.58

Correlation Coefficient

SK TELECOM  EMPEROR ENT

Excellent diversification

The 3 months correlation between KMBA and EMPEROR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SK TELECOM TDADR and EMPEROR ENT HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPEROR ENT HOTEL 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 EMPEROR ENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPEROR ENT HOTEL has no effect on the direction of SK TELECOM i.e., SK TELECOM and EMPEROR ENT go up and down completely randomly.

Pair Corralation between SK TELECOM and EMPEROR ENT

Assuming the 90 days trading horizon SK TELECOM TDADR is expected to generate 0.48 times more return on investment than EMPEROR ENT. However, SK TELECOM TDADR is 2.07 times less risky than EMPEROR ENT. It trades about 0.05 of its potential returns per unit of risk. EMPEROR ENT HOTEL is currently generating about -0.05 per unit of risk. If you would invest  1,870  in SK TELECOM TDADR on April 6, 2025 and sell it today you would earn a total of  80.00  from holding SK TELECOM TDADR or generate 4.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.78%
Values	Daily Returns

SK TELECOM TDADR  vs.  EMPEROR ENT HOTEL

SK TELECOM TDADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SK TELECOM TDADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, SK TELECOM may actually be approaching a critical reversion point that can send shares even higher in August 2025.

EMPEROR ENT HOTEL

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMPEROR ENT HOTEL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SK TELECOM and EMPEROR ENT

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

The idea behind SK TELECOM TDADR and EMPEROR ENT HOTEL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.