Correlation Between Kbi Metal and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Kbi Metal 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 Kbi Metal and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kbi Metal Co and SK Hynix, you can compare the effects of market volatilities on Kbi Metal 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 Kbi Metal with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and SK Hynix.
Diversification Opportunities for Kbi Metal and SK Hynix
Modest diversification
The 3 months correlation between Kbi and 000660 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Kbi Metal 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 Kbi Metal 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 Kbi Metal i.e., Kbi Metal and SK Hynix go up and down completely randomly.
Pair Corralation between Kbi Metal and SK Hynix
Assuming the 90 days trading horizon Kbi Metal Co is expected to under-perform the SK Hynix. In addition to that, Kbi Metal is 1.73 times more volatile than SK Hynix. It trades about -0.26 of its total potential returns per unit of risk. SK Hynix is currently generating about -0.18 per unit of volatility. If you would invest 19,260,000 in SK Hynix on September 12, 2024 and sell it today you would lose (2,220,000) from holding SK Hynix or give up 11.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. SK Hynix
Performance |
| Timeline |
| Kbi Metal |
| SK Hynix |
Kbi Metal and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and SK Hynix
The main advantage of trading using opposite Kbi Metal and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal 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.| Kbi Metal vs. Daejung Chemicals Metals | Kbi Metal vs. Dongbang Transport Logistics | Kbi Metal vs. Hankook Furniture Co | Kbi Metal vs. Home Center Holdings |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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