Correlation Between PJ Electronics and SK Hynix
Can any of the company-specific risk be diversified away by investing in both PJ Electronics 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 PJ Electronics and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PJ Electronics Co and SK Hynix, you can compare the effects of market volatilities on PJ Electronics 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 PJ Electronics with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of PJ Electronics and SK Hynix.
Diversification Opportunities for PJ Electronics and SK Hynix
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 006140 and 000660 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PJ Electronics Co and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and PJ Electronics 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 PJ Electronics 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 PJ Electronics i.e., PJ Electronics and SK Hynix go up and down completely randomly.
Pair Corralation between PJ Electronics and SK Hynix
Assuming the 90 days trading horizon PJ Electronics Co is expected to generate 0.51 times more return on investment than SK Hynix. However, PJ Electronics Co is 1.95 times less risky than SK Hynix. It trades about 0.29 of its potential returns per unit of risk. SK Hynix is currently generating about 0.13 per unit of risk. If you would invest 431,842 in PJ Electronics Co on October 17, 2024 and sell it today you would earn a total of 46,658 from holding PJ Electronics Co or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PJ Electronics Co vs. SK Hynix
Performance |
| Timeline |
| PJ Electronics |
| SK Hynix |
PJ Electronics and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PJ Electronics and SK Hynix
The main advantage of trading using opposite PJ Electronics and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PJ Electronics 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.| PJ Electronics vs. Hana Materials | PJ Electronics vs. TS Investment Corp | PJ Electronics vs. Phoenix Materials Co | PJ Electronics vs. KTB Investment Securities |
| SK Hynix vs. PJ Electronics Co | SK Hynix vs. Hankook Furniture Co | SK Hynix vs. Homecast CoLtd | SK Hynix vs. Polaris Office Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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