Correlation Between Kumho Industrial and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Kumho Industrial and SK Hynix 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 Kumho Industrial and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumho Industrial Co and SK Hynix, you can compare the effects of market volatilities on Kumho Industrial and SK Hynix 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 Kumho Industrial with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Industrial and SK Hynix.
Diversification Opportunities for Kumho Industrial and SK Hynix
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumho and 000660 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Industrial Co and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Kumho Industrial 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 Kumho Industrial Co are associated (or correlated) with SK Hynix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Hynix has no effect on the direction of Kumho Industrial i.e., Kumho Industrial and SK Hynix go up and down completely randomly.
Pair Corralation between Kumho Industrial and SK Hynix
Assuming the 90 days trading horizon Kumho Industrial Co is expected to generate 1.52 times more return on investment than SK Hynix. However, Kumho Industrial is 1.52 times more volatile than SK Hynix. It trades about 0.01 of its potential returns per unit of risk. SK Hynix is currently generating about -0.18 per unit of risk. If you would invest 278,000 in Kumho Industrial Co on September 12, 2024 and sell it today you would lose (4,000) from holding Kumho Industrial Co or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Industrial Co vs. SK Hynix
Performance |
| Timeline |
| Kumho Industrial |
| SK Hynix |
Kumho Industrial and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Industrial and SK Hynix
The main advantage of trading using opposite Kumho Industrial and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Industrial position performs unexpectedly, SK Hynix 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 SK Hynix will offset losses from the drop in SK Hynix's long position.| Kumho Industrial vs. Samsung Electronics Co | Kumho Industrial vs. Samsung Electronics Co | Kumho Industrial vs. SK Hynix | Kumho Industrial vs. POSCO Holdings |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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