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
Good diversification
The 3 months correlation between HMM and 000660 is -0.15. 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 generate 0.7 times more return on investment than SK Hynix. However, HMM Co is 1.43 times less risky than SK Hynix. It trades about 0.1 of its potential returns per unit of risk. SK Hynix is currently generating about 0.03 per unit of risk. If you would invest 1,655,000 in HMM Co on September 12, 2024 and sell it today you would earn a total of 222,000 from holding HMM Co or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| 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.| HMM vs. Korea New Network | HMM vs. Solution Advanced Technology | HMM vs. Busan Industrial Co | HMM vs. Busan Ind |
| SK Hynix vs. Cube Entertainment | SK Hynix vs. Dreamus Company | SK Hynix vs. LG Energy Solution | SK Hynix vs. Dongwon System |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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