Correlation Between SK Hynix and ED
Can any of the company-specific risk be diversified away by investing in both SK Hynix and ED 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 ED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and ED Co, you can compare the effects of market volatilities on SK Hynix and ED 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 ED. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and ED.
Diversification Opportunities for SK Hynix and ED
Modest diversification
The 3 months correlation between 000660 and ED is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and ED Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED 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 ED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Co has no effect on the direction of SK Hynix i.e., SK Hynix and ED go up and down completely randomly.
Pair Corralation between SK Hynix and ED
Assuming the 90 days trading horizon SK Hynix is expected to generate 0.65 times more return on investment than ED. However, SK Hynix is 1.53 times less risky than ED. It trades about -0.03 of its potential returns per unit of risk. ED Co is currently generating about -0.02 per unit of risk. If you would invest 19,313,400 in SK Hynix on September 3, 2024 and sell it today you would lose (3,433,400) from holding SK Hynix or give up 17.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. ED Co
Performance |
| Timeline |
| SK Hynix |
| ED Co |
SK Hynix and ED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and ED
The main advantage of trading using opposite SK Hynix and ED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, ED 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 ED will offset losses from the drop in ED's long position.| SK Hynix vs. Haitai Confectionery Foods | SK Hynix vs. Dongkuk Structures Construction | SK Hynix vs. Tuksu Engineering ConstructionLtd | SK Hynix vs. Camus Engineering Construction |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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