Correlation Between HB Technology and SK Hynix

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

Diversification Opportunities for HB Technology and SK Hynix

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between 078150 and 000660 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding HB Technology TD and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and HB Technology 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 HB Technology TD 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 HB Technology i.e., HB Technology and SK Hynix go up and down completely randomly.

Pair Corralation between HB Technology and SK Hynix

Assuming the 90 days trading horizon HB Technology TD is expected to generate 1.54 times more return on investment than SK Hynix. However, HB Technology is 1.54 times more volatile than SK Hynix. It trades about -0.01 of its potential returns per unit of risk. SK Hynix is currently generating about -0.05 per unit of risk. If you would invest  189,000  in HB Technology TD on September 14, 2024 and sell it today you would lose (5,600) from holding HB Technology TD or give up 2.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HB Technology TD  vs.  SK Hynix

 Performance 
       Timeline  
HB Technology TD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HB Technology TD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
SK Hynix 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SK Hynix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SK Hynix sustained solid returns over the last few months and may actually be approaching a breakup point.

HB Technology and SK Hynix Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HB Technology and SK Hynix

The main advantage of trading using opposite HB Technology and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HB Technology 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.
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The idea behind HB Technology TD 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.
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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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