Correlation Between SK Hynix and Lotte Energy
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Lotte Energy 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 Lotte Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Lotte Energy Materials, you can compare the effects of market volatilities on SK Hynix and Lotte Energy 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 Lotte Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Lotte Energy.
Diversification Opportunities for SK Hynix and Lotte Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between 000660 and Lotte is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Lotte Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Energy Materials 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 Lotte Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Energy Materials has no effect on the direction of SK Hynix i.e., SK Hynix and Lotte Energy go up and down completely randomly.
Pair Corralation between SK Hynix and Lotte Energy
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.36 times more return on investment than Lotte Energy. However, SK Hynix is 1.36 times more volatile than Lotte Energy Materials. It trades about -0.05 of its potential returns per unit of risk. Lotte Energy Materials is currently generating about -0.2 per unit of risk. If you would invest 19,980,000 in SK Hynix on November 7, 2024 and sell it today you would lose (870,000) from holding SK Hynix or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
SK Hynix vs. Lotte Energy Materials
Performance |
| Timeline |
| SK Hynix |
| Lotte Energy Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SK Hynix and Lotte Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Lotte Energy
The main advantage of trading using opposite SK Hynix and Lotte Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Lotte Energy 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 Lotte Energy will offset losses from the drop in Lotte Energy's long position.| SK Hynix vs. Dongbang Transport Logistics | SK Hynix vs. Choil Aluminum | SK Hynix vs. Ewon Comfortech Co | SK Hynix vs. Dongnam Chemical Co |
| Lotte Energy vs. Ilji Technology Co | Lotte Energy vs. Korea Information Communications | Lotte Energy vs. Korea Electronic Certification | Lotte Energy vs. Eagle Veterinary Technology |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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