Correlation Between Finebesteel and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Finebesteel 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 Finebesteel and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and SK Hynix, you can compare the effects of market volatilities on Finebesteel 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 Finebesteel with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and SK Hynix.
Diversification Opportunities for Finebesteel and SK Hynix
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finebesteel and 000660 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Finebesteel 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 Finebesteel 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 Finebesteel i.e., Finebesteel and SK Hynix go up and down completely randomly.
Pair Corralation between Finebesteel and SK Hynix
Assuming the 90 days trading horizon Finebesteel is expected to generate 1.57 times more return on investment than SK Hynix. However, Finebesteel is 1.57 times more volatile than SK Hynix. It trades about 0.29 of its potential returns per unit of risk. SK Hynix is currently generating about -0.14 per unit of risk. If you would invest 84,000 in Finebesteel on August 29, 2024 and sell it today you would earn a total of 28,200 from holding Finebesteel or generate 33.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. SK Hynix
Performance |
| Timeline |
| Finebesteel |
| SK Hynix |
Finebesteel and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and SK Hynix
The main advantage of trading using opposite Finebesteel and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel 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.| Finebesteel vs. Dong Il Steel | Finebesteel vs. Seah Steel Corp | Finebesteel vs. Ajusteel Co | Finebesteel vs. Ni Steel |
| SK Hynix vs. Finebesteel | SK Hynix vs. Gyeongnam Steel Co | SK Hynix vs. Jeil Steel Mfg | SK Hynix vs. Echomarketing 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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