Correlation Between Cosan SA and SK Telecom

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

By analyzing existing cross correlation between Cosan SA ADR and SK Telecom Co, you can compare the effects of market volatilities on Cosan SA 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 Cosan SA with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and SK Telecom.

Diversification Opportunities for Cosan SA and SK Telecom

0.08

Correlation Coefficient

Cosan SA  SK Telecom

Significant diversification

The 3 months correlation between Cosan and SKM is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Cosan SA 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 Cosan SA ADR 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 has no effect on the direction of Cosan SA i.e., Cosan SA and SK Telecom go up and down completely randomly.

Pair Corralation between Cosan SA and SK Telecom

Given the investment horizon of 90 days Cosan SA ADR is expected to generate 7.28 times more return on investment than SK Telecom. However, Cosan SA is 7.28 times more volatile than SK Telecom Co. It trades about 0.11 of its potential returns per unit of risk. SK Telecom Co is currently generating about -0.08 per unit of risk. If you would invest  422.00  in Cosan SA ADR on June 29, 2025 and sell it today you would earn a total of  41.00  from holding Cosan SA ADR or generate 9.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cosan SA ADR  vs.  SK Telecom Co

Cosan SA ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days Cosan SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cosan SA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SK Telecom

Risk-Adjusted Performance

Weakest

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 very healthy forward-looking signals, SK Telecom is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cosan SA and SK Telecom

The main advantage of trading using opposite Cosan SA and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA 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 Cosan SA ADR and SK Telecom 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.