Correlation Between Seoul Electronics and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics 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 Seoul Electronics and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Electronics Telecom and SK Hynix, you can compare the effects of market volatilities on Seoul Electronics 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 Seoul Electronics with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and SK Hynix.
Diversification Opportunities for Seoul Electronics and SK Hynix
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and 000660 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Seoul Electronics 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 Seoul Electronics Telecom 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 Seoul Electronics i.e., Seoul Electronics and SK Hynix go up and down completely randomly.
Pair Corralation between Seoul Electronics and SK Hynix
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 0.74 times more return on investment than SK Hynix. However, Seoul Electronics Telecom is 1.35 times less risky than SK Hynix. It trades about 0.38 of its potential returns per unit of risk. SK Hynix is currently generating about 0.24 per unit of risk. If you would invest 22,200 in Seoul Electronics Telecom on October 14, 2024 and sell it today you would earn a total of 4,300 from holding Seoul Electronics Telecom or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Electronics Telecom vs. SK Hynix
Performance |
| Timeline |
| Seoul Electronics Telecom |
| SK Hynix |
Seoul Electronics and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and SK Hynix
The main advantage of trading using opposite Seoul Electronics and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics 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.| Seoul Electronics vs. Kbi Metal Co | Seoul Electronics vs. Shinil Electronics Co | Seoul Electronics vs. Daeduck Electronics Co | Seoul Electronics vs. Korea Electronic Certification |
| SK Hynix vs. Finebesteel | SK Hynix vs. Fine Besteel Co | SK Hynix vs. Samsung Life Insurance | SK Hynix vs. CU Medical Systems |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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