Correlation Between SK Hynix and Korea Gas
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Korea Gas 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 Korea Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Korea Gas, you can compare the effects of market volatilities on SK Hynix and Korea Gas 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 Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Korea Gas.
Diversification Opportunities for SK Hynix and Korea Gas
Excellent diversification
The 3 months correlation between 000660 and Korea is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of SK Hynix i.e., SK Hynix and Korea Gas go up and down completely randomly.
Pair Corralation between SK Hynix and Korea Gas
Assuming the 90 days trading horizon SK Hynix is expected to generate 2.26 times less return on investment than Korea Gas. But when comparing it to its historical volatility, SK Hynix is 1.35 times less risky than Korea Gas. It trades about 0.05 of its potential returns per unit of risk. Korea Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,455,000 in Korea Gas on August 24, 2024 and sell it today you would earn a total of 2,190,000 from holding Korea Gas or generate 89.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. Korea Gas
Performance |
| Timeline |
| SK Hynix |
| Korea Gas |
SK Hynix and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Korea Gas
The main advantage of trading using opposite SK Hynix and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Korea Gas 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 Korea Gas will offset losses from the drop in Korea Gas' long position.| SK Hynix vs. Kaonmedia Co | SK Hynix vs. Jin Air Co | SK Hynix vs. Daewon Media Co | SK Hynix vs. SM Entertainment Co |
| Korea Gas vs. SS TECH | Korea Gas vs. QUALITAS SEMICONDUCTOR LTD | Korea Gas vs. BGF Retail Co | Korea Gas vs. Osang Healthcare Co,Ltd |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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