Correlation Between SK Chemicals and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Digital Imaging 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 Chemicals and Digital Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and Digital Imaging Technology, you can compare the effects of market volatilities on SK Chemicals and Digital Imaging 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 Chemicals with a short position of Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Digital Imaging.
Diversification Opportunities for SK Chemicals and Digital Imaging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 285130 and Digital is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech and SK Chemicals 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 Chemicals Co are associated (or correlated) with Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of SK Chemicals i.e., SK Chemicals and Digital Imaging go up and down completely randomly.
Pair Corralation between SK Chemicals and Digital Imaging
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the Digital Imaging. But the stock apears to be less risky and, when comparing its historical volatility, SK Chemicals Co is 2.47 times less risky than Digital Imaging. The stock trades about -0.05 of its potential returns per unit of risk. The Digital Imaging Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 589,211 in Digital Imaging Technology on October 11, 2024 and sell it today you would earn a total of 737,789 from holding Digital Imaging Technology or generate 125.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Digital Imaging Technology
Performance |
| Timeline |
| SK Chemicals |
| Digital Imaging Tech |
SK Chemicals and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Digital Imaging
The main advantage of trading using opposite SK Chemicals and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.| SK Chemicals vs. Daewon Chemical Co | SK Chemicals vs. Jeju Beer Co | SK Chemicals vs. Tae Kyung Chemical | SK Chemicals vs. JC Chemical Co |
| Digital Imaging vs. SK Telecom Co | Digital Imaging vs. Daishin Information Communications | Digital Imaging vs. SK Chemicals Co | Digital Imaging vs. Display Tech Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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