Correlation Between SK Hynix and DIO
Can any of the company-specific risk be diversified away by investing in both SK Hynix and DIO 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 DIO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and DIO Corporation, you can compare the effects of market volatilities on SK Hynix and DIO 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 DIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and DIO.
Diversification Opportunities for SK Hynix and DIO
Good diversification
The 3 months correlation between 000660 and DIO is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and DIO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIO Corporation 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 DIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIO Corporation has no effect on the direction of SK Hynix i.e., SK Hynix and DIO go up and down completely randomly.
Pair Corralation between SK Hynix and DIO
Assuming the 90 days trading horizon SK Hynix is expected to under-perform the DIO. In addition to that, SK Hynix is 1.35 times more volatile than DIO Corporation. It trades about -0.18 of its total potential returns per unit of risk. DIO Corporation is currently generating about -0.01 per unit of volatility. If you would invest 1,618,000 in DIO Corporation on September 12, 2024 and sell it today you would lose (13,000) from holding DIO Corporation or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. DIO Corp.
Performance |
| Timeline |
| SK Hynix |
| DIO Corporation |
SK Hynix and DIO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and DIO
The main advantage of trading using opposite SK Hynix and DIO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, DIO 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 DIO will offset losses from the drop in DIO's long position.| SK Hynix vs. Cube Entertainment | SK Hynix vs. Dreamus Company | SK Hynix vs. LG Energy Solution | SK Hynix vs. Dongwon System |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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