Correlation Between SK Telecom and Metalrgica Riosulense

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

Diversification Opportunities for SK Telecom and Metalrgica Riosulense

0.22

Correlation Coefficient

SK Telecom  Metalrgica Riosulense

Modest diversification

The 3 months correlation between S1KM34 and Metalrgica is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co, and Metalrgica Riosulense SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalrgica Riosulense 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 Metalrgica Riosulense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalrgica Riosulense has no effect on the direction of SK Telecom i.e., SK Telecom and Metalrgica Riosulense go up and down completely randomly.

Pair Corralation between SK Telecom and Metalrgica Riosulense

Assuming the 90 days trading horizon SK Telecom Co, is expected to under-perform the Metalrgica Riosulense. In addition to that, SK Telecom is 1.3 times more volatile than Metalrgica Riosulense SA. It trades about -0.03 of its total potential returns per unit of risk. Metalrgica Riosulense SA is currently generating about -0.01 per unit of volatility. If you would invest  7,000  in Metalrgica Riosulense SA on April 25, 2025 and sell it today you would lose (104.00) from holding Metalrgica Riosulense SA or give up 1.49% of portfolio value over 90 days.

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

SK Telecom Co,  vs.  Metalrgica Riosulense SA

SK Telecom Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days SK Telecom Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, SK Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Metalrgica Riosulense

Risk-Adjusted Performance

Weak

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

Pair Trading with SK Telecom and Metalrgica Riosulense

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

The idea behind SK Telecom Co, and Metalrgica Riosulense 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.