Correlation Between SK Hynix and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both SK Hynix and LG Chemicals 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 Chemicals 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 Chemicals, you can compare the effects of market volatilities on SK Hynix and LG Chemicals 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 Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and LG Chemicals.
Diversification Opportunities for SK Hynix and LG Chemicals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between 000660 and 051910 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals 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 Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of SK Hynix i.e., SK Hynix and LG Chemicals go up and down completely randomly.
Pair Corralation between SK Hynix and LG Chemicals
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.36 times more return on investment than LG Chemicals. However, SK Hynix is 1.36 times more volatile than LG Chemicals. It trades about -0.01 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.15 per unit of risk. If you would invest 18,380,000 in SK Hynix on August 28, 2024 and sell it today you would lose (670,000) from holding SK Hynix or give up 3.65% 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. LG Chemicals
Performance |
| Timeline |
| SK Hynix |
| LG Chemicals |
SK Hynix and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and LG Chemicals
The main advantage of trading using opposite SK Hynix and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| SK Hynix vs. Korea Real Estate | SK Hynix vs. Korea Ratings Co | SK Hynix vs. IQuest Co | SK Hynix vs. Wonbang Tech Co |
| LG Chemicals vs. Hyundai Industrial Co | LG Chemicals vs. Songwon Industrial Co | LG Chemicals vs. Daiyang Metal Co | LG Chemicals vs. Pungguk Ethanol Industrial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |