Correlation Between Songwon Industrial and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Songwon 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 Songwon 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 Songwon Industrial Co and SK Hynix, you can compare the effects of market volatilities on Songwon 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 Songwon Industrial with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and SK Hynix.
Diversification Opportunities for Songwon Industrial and SK Hynix
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Songwon and 000660 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Songwon 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 Songwon 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 Songwon 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 Songwon Industrial i.e., Songwon Industrial and SK Hynix go up and down completely randomly.
Pair Corralation between Songwon Industrial and SK Hynix
Assuming the 90 days trading horizon Songwon Industrial is expected to generate 2.56 times less return on investment than SK Hynix. But when comparing it to its historical volatility, Songwon Industrial Co is 1.4 times less risky than SK Hynix. It trades about 0.21 of its potential returns per unit of risk. SK Hynix is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 17,010,000 in SK Hynix on October 26, 2024 and sell it today you would earn a total of 4,940,000 from holding SK Hynix or generate 29.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. SK Hynix
Performance |
| Timeline |
| Songwon Industrial |
| SK Hynix |
Songwon Industrial and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and SK Hynix
The main advantage of trading using opposite Songwon Industrial and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon 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.| Songwon Industrial vs. Nh Investment And | Songwon Industrial vs. EBEST Investment Securities | Songwon Industrial vs. Settlebank | Songwon Industrial vs. Hana Financial |
| SK Hynix vs. Daejung Chemicals Metals | SK Hynix vs. Namhwa Industrial Co | SK Hynix vs. CU Medical Systems | SK Hynix vs. Songwon Industrial Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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