Correlation Between SK Hynix and LG Uplus
Can any of the company-specific risk be diversified away by investing in both SK Hynix and LG Uplus 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 LG Uplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and LG Uplus, you can compare the effects of market volatilities on SK Hynix and LG Uplus 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 LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and LG Uplus.
Diversification Opportunities for SK Hynix and LG Uplus
Excellent diversification
The 3 months correlation between 000660 and 032640 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus 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 LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of SK Hynix i.e., SK Hynix and LG Uplus go up and down completely randomly.
Pair Corralation between SK Hynix and LG Uplus
Assuming the 90 days trading horizon SK Hynix is expected to generate 2.67 times more return on investment than LG Uplus. However, SK Hynix is 2.67 times more volatile than LG Uplus. It trades about 0.1 of its potential returns per unit of risk. LG Uplus is currently generating about 0.0 per unit of risk. If you would invest 16,802,100 in SK Hynix on November 2, 2024 and sell it today you would earn a total of 5,297,900 from holding SK Hynix or generate 31.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. LG Uplus
Performance |
| Timeline |
| SK Hynix |
| LG Uplus |
SK Hynix and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and LG Uplus
The main advantage of trading using opposite SK Hynix and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, LG Uplus 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 LG Uplus will offset losses from the drop in LG Uplus' long position.| SK Hynix vs. CKH Food Health | SK Hynix vs. Next Entertainment World | SK Hynix vs. Infinitt Healthcare Co | SK Hynix vs. Sewoon Medical Co |
| LG Uplus vs. Busan Industrial Co | LG Uplus vs. Busan Ind | LG Uplus vs. RPBio Inc | LG Uplus vs. Finebesteel |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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