Correlation Between SK Holdings and BHI
Can any of the company-specific risk be diversified away by investing in both SK Holdings and BHI 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 SK Holdings and BHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Holdings Co and BHI Co, you can compare the effects of market volatilities on SK Holdings and BHI 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 SK Holdings with a short position of BHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Holdings and BHI.
Diversification Opportunities for SK Holdings and BHI
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between 034730 and BHI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SK Holdings Co and BHI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHI Co and SK Holdings 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 SK Holdings Co are associated (or correlated) with BHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHI Co has no effect on the direction of SK Holdings i.e., SK Holdings and BHI go up and down completely randomly.
Pair Corralation between SK Holdings and BHI
Assuming the 90 days trading horizon SK Holdings is expected to generate 3.6 times less return on investment than BHI. But when comparing it to its historical volatility, SK Holdings Co is 3.13 times less risky than BHI. It trades about 0.39 of its potential returns per unit of risk. BHI Co is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1,544,000 in BHI Co on October 30, 2024 and sell it today you would earn a total of 806,000 from holding BHI Co or generate 52.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Holdings Co vs. BHI Co
Performance |
| Timeline |
| SK Holdings |
| BHI Co |
SK Holdings and BHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Holdings and BHI
The main advantage of trading using opposite SK Holdings and BHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Holdings position performs unexpectedly, BHI 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 BHI will offset losses from the drop in BHI's long position.| SK Holdings vs. Sangsin Energy Display | SK Holdings vs. Iljin Display | SK Holdings vs. Nable Communications | SK Holdings vs. Grand Korea Leisure |
| BHI vs. Spolytech Co | BHI vs. Lion Chemtech Co | BHI vs. Ssangyong Information Communication | BHI vs. Digital Power Communications |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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