Correlation Between SK Hynix and ChipsMedia
Can any of the company-specific risk be diversified away by investing in both SK Hynix and ChipsMedia 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 ChipsMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and ChipsMedia, you can compare the effects of market volatilities on SK Hynix and ChipsMedia 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 ChipsMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and ChipsMedia.
Diversification Opportunities for SK Hynix and ChipsMedia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 000660 and ChipsMedia is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia 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 ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of SK Hynix i.e., SK Hynix and ChipsMedia go up and down completely randomly.
Pair Corralation between SK Hynix and ChipsMedia
Assuming the 90 days trading horizon SK Hynix is expected to generate 0.84 times more return on investment than ChipsMedia. However, SK Hynix is 1.19 times less risky than ChipsMedia. It trades about 0.05 of its potential returns per unit of risk. ChipsMedia is currently generating about -0.03 per unit of risk. If you would invest 14,931,400 in SK Hynix on November 5, 2024 and sell it today you would earn a total of 4,988,600 from holding SK Hynix or generate 33.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. ChipsMedia
Performance |
| Timeline |
| SK Hynix |
| ChipsMedia |
SK Hynix and ChipsMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and ChipsMedia
The main advantage of trading using opposite SK Hynix and ChipsMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, ChipsMedia 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 ChipsMedia will offset losses from the drop in ChipsMedia's long position.| SK Hynix vs. Sangsin Energy Display | SK Hynix vs. Daishin Information Communications | SK Hynix vs. GS Retail Co | SK Hynix vs. CU Medical Systems |
| ChipsMedia vs. Shinhan Financial Group | ChipsMedia vs. DB Insurance Co | ChipsMedia vs. Daejung Chemicals Metals | ChipsMedia vs. Kukdo Chemical Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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