Correlation Between HMM and SK Hynix
Can any of the company-specific risk be diversified away by investing in both HMM 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 HMM and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and SK Hynix, you can compare the effects of market volatilities on HMM 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 HMM with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and SK Hynix.
Diversification Opportunities for HMM and SK Hynix
Modest diversification
The 3 months correlation between HMM and 000660 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and HMM 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 HMM 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 HMM i.e., HMM and SK Hynix go up and down completely randomly.
Pair Corralation between HMM and SK Hynix
Assuming the 90 days trading horizon HMM Co is expected to under-perform the SK Hynix. But the stock apears to be less risky and, when comparing its historical volatility, HMM Co is 1.25 times less risky than SK Hynix. The stock trades about -0.03 of its potential returns per unit of risk. The SK Hynix is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 19,980,000 in SK Hynix on November 7, 2024 and sell it today you would lose (100,000) from holding SK Hynix or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. SK Hynix
Performance |
| Timeline |
| HMM Co |
| SK Hynix |
HMM and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and SK Hynix
The main advantage of trading using opposite HMM and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM 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.The idea behind HMM Co and SK Hynix pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SK Hynix vs. Dongbang Transport Logistics | SK Hynix vs. Choil Aluminum | SK Hynix vs. Ewon Comfortech Co | SK Hynix vs. Dongnam Chemical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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