Correlation Between Dongwon System and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Dongwon System 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 Dongwon System and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and SK Hynix, you can compare the effects of market volatilities on Dongwon System 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 Dongwon System with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and SK Hynix.
Diversification Opportunities for Dongwon System and SK Hynix
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwon and 000660 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Dongwon System 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 Dongwon System 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 Dongwon System i.e., Dongwon System and SK Hynix go up and down completely randomly.
Pair Corralation between Dongwon System and SK Hynix
Assuming the 90 days trading horizon Dongwon System is expected to generate 2.1 times less return on investment than SK Hynix. In addition to that, Dongwon System is 1.09 times more volatile than SK Hynix. It trades about 0.02 of its total potential returns per unit of risk. SK Hynix is currently generating about 0.05 per unit of volatility. If you would invest 11,582,000 in SK Hynix on September 12, 2024 and sell it today you would earn a total of 5,458,000 from holding SK Hynix or generate 47.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. SK Hynix
Performance |
| Timeline |
| Dongwon System |
| SK Hynix |
Dongwon System and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and SK Hynix
The main advantage of trading using opposite Dongwon System and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System 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.| Dongwon System vs. LG Chemicals | Dongwon System vs. POSCO Holdings | Dongwon System vs. Hanwha Solutions | Dongwon System vs. Lotte Chemical Corp |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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