Correlation Between SK Hynix and Digital Multimedia
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Digital Multimedia 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 Digital Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Digital Multimedia Technology, you can compare the effects of market volatilities on SK Hynix and Digital Multimedia 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 Digital Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Digital Multimedia.
Diversification Opportunities for SK Hynix and Digital Multimedia
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 000660 and Digital is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia 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 Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of SK Hynix i.e., SK Hynix and Digital Multimedia go up and down completely randomly.
Pair Corralation between SK Hynix and Digital Multimedia
Assuming the 90 days trading horizon SK Hynix is expected to generate 2.02 times less return on investment than Digital Multimedia. But when comparing it to its historical volatility, SK Hynix is 1.28 times less risky than Digital Multimedia. It trades about 0.31 of its potential returns per unit of risk. Digital Multimedia Technology is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 151,600 in Digital Multimedia Technology on October 20, 2024 and sell it today you would earn a total of 77,900 from holding Digital Multimedia Technology or generate 51.39% 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. Digital Multimedia Technology
Performance |
| Timeline |
| SK Hynix |
| Digital Multimedia |
SK Hynix and Digital Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Digital Multimedia
The main advantage of trading using opposite SK Hynix and Digital Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Digital Multimedia 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 Digital Multimedia will offset losses from the drop in Digital Multimedia's long position.| SK Hynix vs. SV Investment | SK Hynix vs. Leaders Technology Investment | SK Hynix vs. Shinhan Financial Group | SK Hynix vs. Woori Financial Group |
| Digital Multimedia vs. AptaBio Therapeutics | Digital Multimedia vs. Daewoo SBI SPAC | Digital Multimedia vs. Dream Security co | Digital Multimedia vs. Microfriend |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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