Correlation Between SK Hynix and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Solution Advanced 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 Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Solution Advanced Technology, you can compare the effects of market volatilities on SK Hynix and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Solution Advanced.
Diversification Opportunities for SK Hynix and Solution Advanced
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between 000660 and Solution is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of SK Hynix i.e., SK Hynix and Solution Advanced go up and down completely randomly.
Pair Corralation between SK Hynix and Solution Advanced
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.07 times more return on investment than Solution Advanced. However, SK Hynix is 1.07 times more volatile than Solution Advanced Technology. It trades about 0.35 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about 0.22 per unit of risk. If you would invest 17,450,000 in SK Hynix on October 28, 2024 and sell it today you would earn a total of 4,650,000 from holding SK Hynix or generate 26.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. Solution Advanced Technology
Performance |
| Timeline |
| SK Hynix |
| Solution Advanced |
SK Hynix and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Solution Advanced
The main advantage of trading using opposite SK Hynix and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| SK Hynix vs. Hankuk Steel Wire | SK Hynix vs. Nam Hwa Construction | SK Hynix vs. Dongwoo Farm To | SK Hynix vs. Kyeryong Construction Industrial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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