Correlation Between HMM and SK Holdings
Can any of the company-specific risk be diversified away by investing in both HMM and SK Holdings 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 Holdings 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 Holdings Co, you can compare the effects of market volatilities on HMM and SK Holdings 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 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and SK Holdings.
Diversification Opportunities for HMM and SK Holdings
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HMM and 034730 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings 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 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of HMM i.e., HMM and SK Holdings go up and down completely randomly.
Pair Corralation between HMM and SK Holdings
Assuming the 90 days trading horizon HMM Co is expected to under-perform the SK Holdings. In addition to that, HMM is 2.12 times more volatile than SK Holdings Co. It trades about -0.03 of its total potential returns per unit of risk. SK Holdings Co is currently generating about 0.21 per unit of volatility. If you would invest 14,090,000 in SK Holdings Co on November 7, 2024 and sell it today you would earn a total of 720,000 from holding SK Holdings Co or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
HMM Co vs. SK Holdings Co
Performance |
| Timeline |
| HMM Co |
| SK Holdings |
HMM and SK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and SK Holdings
The main advantage of trading using opposite HMM and SK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, SK Holdings 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 Holdings will offset losses from the drop in SK Holdings' long position.The idea behind HMM Co and SK Holdings Co 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 Holdings vs. Samsung Card Co | SK Holdings vs. EBEST Investment Securities | SK Holdings vs. Koh Young Technology | SK Holdings vs. Hansol Chemica |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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