Correlation Between Dragonfly and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Dragonfly 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 Dragonfly and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dragonfly GF Co and SK Hynix, you can compare the effects of market volatilities on Dragonfly 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 Dragonfly with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dragonfly and SK Hynix.
Diversification Opportunities for Dragonfly and SK Hynix
Excellent diversification
The 3 months correlation between Dragonfly and 000660 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Dragonfly 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 Dragonfly GF 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 Dragonfly i.e., Dragonfly and SK Hynix go up and down completely randomly.
Pair Corralation between Dragonfly and SK Hynix
Assuming the 90 days trading horizon Dragonfly GF Co is expected to under-perform the SK Hynix. In addition to that, Dragonfly is 1.48 times more volatile than SK Hynix. It trades about -0.06 of its total potential returns per unit of risk. SK Hynix is currently generating about 0.07 per unit of volatility. If you would invest 7,955,198 in SK Hynix on September 2, 2024 and sell it today you would earn a total of 8,034,802 from holding SK Hynix or generate 101.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
Dragonfly GF Co vs. SK Hynix
Performance |
| Timeline |
| Dragonfly GF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SK Hynix |
Dragonfly and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dragonfly and SK Hynix
The main advantage of trading using opposite Dragonfly and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dragonfly 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.| Dragonfly vs. Iljin Display | Dragonfly vs. Daesung Hi Tech Co | Dragonfly vs. Daou Technology | Dragonfly vs. Hwangkum Steel Technology |
| SK Hynix vs. Nice Information Telecommunication | SK Hynix vs. PJ Metal Co | SK Hynix vs. iNtRON Biotechnology | SK Hynix vs. Dongil Metal Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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