Correlation Between SK Hynix and BHI
Can any of the company-specific risk be diversified away by investing in both SK Hynix and BHI 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 BHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and BHI Co, you can compare the effects of market volatilities on SK Hynix and BHI 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 BHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and BHI.
Diversification Opportunities for SK Hynix and BHI
Very good diversification
The 3 months correlation between 000660 and BHI is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and BHI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHI Co 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 BHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHI Co has no effect on the direction of SK Hynix i.e., SK Hynix and BHI go up and down completely randomly.
Pair Corralation between SK Hynix and BHI
Assuming the 90 days trading horizon SK Hynix is expected to generate 2.15 times less return on investment than BHI. But when comparing it to its historical volatility, SK Hynix is 1.14 times less risky than BHI. It trades about 0.13 of its potential returns per unit of risk. BHI Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,440,000 in BHI Co on October 17, 2024 and sell it today you would earn a total of 301,000 from holding BHI Co or generate 20.9% 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. BHI Co
Performance |
| Timeline |
| SK Hynix |
| BHI Co |
SK Hynix and BHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and BHI
The main advantage of trading using opposite SK Hynix and BHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, BHI 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 BHI will offset losses from the drop in BHI's long position.| SK Hynix vs. PJ Electronics Co | SK Hynix vs. Hankook Furniture Co | SK Hynix vs. Homecast CoLtd | SK Hynix vs. Polaris Office Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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