Correlation Between Dreamus and SK Hynix

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Can any of the company-specific risk be diversified away by investing in both Dreamus 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 Dreamus and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreamus Company and SK Hynix, you can compare the effects of market volatilities on Dreamus 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 Dreamus with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreamus and SK Hynix.

Diversification Opportunities for Dreamus and SK Hynix

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Dreamus and 000660 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dreamus Company and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Dreamus 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 Dreamus Company 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 Dreamus i.e., Dreamus and SK Hynix go up and down completely randomly.

Pair Corralation between Dreamus and SK Hynix

Assuming the 90 days trading horizon Dreamus Company is expected to under-perform the SK Hynix. In addition to that, Dreamus is 1.28 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 0.05 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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dreamus Company  vs.  SK Hynix

 Performance 
       Timeline  
Dreamus Company 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dreamus Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
SK Hynix 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SK Hynix are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SK Hynix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreamus and SK Hynix Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dreamus and SK Hynix

The main advantage of trading using opposite Dreamus and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreamus 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.
The idea behind Dreamus Company and SK Hynix pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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