Correlation Between SK Hynix and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Dongnam Chemical 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 Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Dongnam Chemical Co, you can compare the effects of market volatilities on SK Hynix and Dongnam Chemical 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 Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Dongnam Chemical.
Diversification Opportunities for SK Hynix and Dongnam Chemical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between 000660 and Dongnam is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical 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 Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of SK Hynix i.e., SK Hynix and Dongnam Chemical go up and down completely randomly.
Pair Corralation between SK Hynix and Dongnam Chemical
Assuming the 90 days trading horizon SK Hynix is expected to generate 2.45 times more return on investment than Dongnam Chemical. However, SK Hynix is 2.45 times more volatile than Dongnam Chemical Co. It trades about 0.06 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 11,532,500 in SK Hynix on September 12, 2024 and sell it today you would earn a total of 5,507,500 from holding SK Hynix or generate 47.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. Dongnam Chemical Co
Performance |
| Timeline |
| SK Hynix |
| Dongnam Chemical |
SK Hynix and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Dongnam Chemical
The main advantage of trading using opposite SK Hynix and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| SK Hynix vs. Cube Entertainment | SK Hynix vs. Dreamus Company | SK Hynix vs. LG Energy Solution | SK Hynix vs. Dongwon System |
| Dongnam Chemical vs. Samsung Electronics Co | Dongnam Chemical vs. Samsung Electronics Co | Dongnam Chemical vs. SK Hynix | Dongnam Chemical vs. POSCO Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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