Correlation Between SK Hynix and CG Hi
Can any of the company-specific risk be diversified away by investing in both SK Hynix and CG Hi 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 CG Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and CG Hi Tech, you can compare the effects of market volatilities on SK Hynix and CG Hi 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 CG Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and CG Hi.
Diversification Opportunities for SK Hynix and CG Hi
Significant diversification
The 3 months correlation between 000660 and 264660 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and CG Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CG Hi Tech 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 CG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CG Hi Tech has no effect on the direction of SK Hynix i.e., SK Hynix and CG Hi go up and down completely randomly.
Pair Corralation between SK Hynix and CG Hi
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.22 times more return on investment than CG Hi. However, SK Hynix is 1.22 times more volatile than CG Hi Tech. It trades about -0.16 of its potential returns per unit of risk. CG Hi Tech is currently generating about -0.39 per unit of risk. If you would invest 19,030,000 in SK Hynix on August 30, 2024 and sell it today you would lose (2,200,000) from holding SK Hynix or give up 11.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. CG Hi Tech
Performance |
| Timeline |
| SK Hynix |
| CG Hi Tech |
SK Hynix and CG Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and CG Hi
The main advantage of trading using opposite SK Hynix and CG Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, CG Hi 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 CG Hi will offset losses from the drop in CG Hi's long position.| SK Hynix vs. Daou Data Corp | SK Hynix vs. Busan Industrial Co | SK Hynix vs. Busan Ind | SK Hynix vs. Shinhan WTI Futures |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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