Correlation Between SK Hynix and Busan Ind
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Busan Ind 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 Hynix and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Busan Ind, you can compare the effects of market volatilities on SK Hynix and Busan Ind 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 Hynix with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Busan Ind.
Diversification Opportunities for SK Hynix and Busan Ind
Very weak diversification
The 3 months correlation between 000660 and Busan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and SK Hynix 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 Hynix are associated (or correlated) with Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of SK Hynix i.e., SK Hynix and Busan Ind go up and down completely randomly.
Pair Corralation between SK Hynix and Busan Ind
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.1 times more return on investment than Busan Ind. However, SK Hynix is 1.1 times more volatile than Busan Ind. It trades about 0.08 of its potential returns per unit of risk. Busan Ind is currently generating about -0.03 per unit of risk. If you would invest 7,945,389 in SK Hynix on August 27, 2024 and sell it today you would earn a total of 9,724,611 from holding SK Hynix or generate 122.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. Busan Ind
Performance |
| Timeline |
| SK Hynix |
| Busan Ind |
SK Hynix and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Busan Ind
The main advantage of trading using opposite SK Hynix and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind's long position.| SK Hynix vs. Hyundai Home Shopping | SK Hynix vs. Hankook Furniture Co | SK Hynix vs. Jin Air Co | SK Hynix vs. JC Chemical Co |
| Busan Ind vs. Samsung Electronics Co | Busan Ind vs. Samsung Electronics Co | Busan Ind vs. LG Energy Solution | Busan Ind vs. SK Hynix |
Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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