Correlation Between SK Hynix and Korea Investment
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Korea Investment 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 Investment 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 Investment Holdings, you can compare the effects of market volatilities on SK Hynix and Korea Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Korea Investment.
Diversification Opportunities for SK Hynix and Korea Investment
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 000660 and Korea is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of SK Hynix i.e., SK Hynix and Korea Investment go up and down completely randomly.
Pair Corralation between SK Hynix and Korea Investment
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.95 times more return on investment than Korea Investment. However, SK Hynix is 1.95 times more volatile than Korea Investment Holdings. It trades about 0.05 of its potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.08 per unit of risk. If you would invest 13,727,500 in SK Hynix on September 14, 2024 and sell it today you would earn a total of 3,882,500 from holding SK Hynix or generate 28.28% 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 Investment Holdings
Performance |
| Timeline |
| SK Hynix |
| Korea Investment Holdings |
SK Hynix and Korea Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Korea Investment
The main advantage of trading using opposite SK Hynix and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Korea Investment 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 Investment will offset losses from the drop in Korea Investment's long position.| SK Hynix vs. Daou Technology | SK Hynix vs. CU Tech Corp | SK Hynix vs. HB Technology TD | SK Hynix vs. Yura Tech Co |
| Korea Investment vs. Samsung Electronics Co | Korea Investment vs. Samsung Electronics Co | Korea Investment vs. SK Hynix | Korea Investment vs. POSCO Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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