Correlation Between Nam Hwa and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Nam Hwa 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 Nam Hwa and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nam Hwa Construction and SK Hynix, you can compare the effects of market volatilities on Nam Hwa 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 Nam Hwa with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and SK Hynix.
Diversification Opportunities for Nam Hwa and SK Hynix
Very good diversification
The 3 months correlation between Nam and 000660 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Nam Hwa 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 Nam Hwa Construction 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 Nam Hwa i.e., Nam Hwa and SK Hynix go up and down completely randomly.
Pair Corralation between Nam Hwa and SK Hynix
Assuming the 90 days trading horizon Nam Hwa is expected to generate 23.2 times less return on investment than SK Hynix. But when comparing it to its historical volatility, Nam Hwa Construction is 1.01 times less risky than SK Hynix. It trades about 0.0 of its potential returns per unit of risk. SK Hynix is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 19,580,000 in SK Hynix on November 6, 2024 and sell it today you would lose (490,000) from holding SK Hynix or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. SK Hynix
Performance |
| Timeline |
| Nam Hwa Construction |
| SK Hynix |
Nam Hwa and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and SK Hynix
The main advantage of trading using opposite Nam Hwa and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa 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.| Nam Hwa vs. Dongil Steel Co | Nam Hwa vs. Nice Information Telecommunication | Nam Hwa vs. Lotte Data Communication | Nam Hwa vs. Dongbang Transport Logistics |
| SK Hynix vs. Jahwa Electronics Co | SK Hynix vs. Korea Electronic Certification | SK Hynix vs. Daishin Information Communications | SK Hynix vs. Alton Sports CoLtd |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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