Correlation Between SK Hynix and Korea Computer
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Korea Computer 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 Computer 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 Computer, you can compare the effects of market volatilities on SK Hynix and Korea Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Korea Computer.
Diversification Opportunities for SK Hynix and Korea Computer
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 000660 and Korea is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of SK Hynix i.e., SK Hynix and Korea Computer go up and down completely randomly.
Pair Corralation between SK Hynix and Korea Computer
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.66 times more return on investment than Korea Computer. However, SK Hynix is 1.66 times more volatile than Korea Computer. It trades about 0.37 of its potential returns per unit of risk. Korea Computer is currently generating about 0.12 per unit of risk. If you would invest 17,390,000 in SK Hynix on October 29, 2024 and sell it today you would earn a total of 4,710,000 from holding SK Hynix or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. Korea Computer
Performance |
| Timeline |
| SK Hynix |
| Korea Computer |
SK Hynix and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Korea Computer
The main advantage of trading using opposite SK Hynix and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| SK Hynix vs. Union Materials Corp | SK Hynix vs. PI Advanced Materials | SK Hynix vs. WONIK Materials CoLtd | SK Hynix vs. INNOX Advanced Materials |
| Korea Computer vs. LG Display Co | Korea Computer vs. ChipsMedia | Korea Computer vs. Ssangyong Information Communication | Korea Computer vs. Daishin Information Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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