Correlation Between Lotte Data and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Lotte Data 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 Lotte Data and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Data Communication and SK Hynix, you can compare the effects of market volatilities on Lotte Data 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 Lotte Data with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and SK Hynix.
Diversification Opportunities for Lotte Data and SK Hynix
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotte and 000660 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Lotte Data 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 Lotte Data Communication 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 Lotte Data i.e., Lotte Data and SK Hynix go up and down completely randomly.
Pair Corralation between Lotte Data and SK Hynix
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 0.81 times more return on investment than SK Hynix. However, Lotte Data Communication is 1.24 times less risky than SK Hynix. It trades about -0.2 of its potential returns per unit of risk. SK Hynix is currently generating about -0.26 per unit of risk. If you would invest 2,300,000 in Lotte Data Communication on August 31, 2024 and sell it today you would lose (255,000) from holding Lotte Data Communication or give up 11.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. SK Hynix
Performance |
| Timeline |
| Lotte Data Communication |
| SK Hynix |
Lotte Data and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and SK Hynix
The main advantage of trading using opposite Lotte Data and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data 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.| Lotte Data vs. SK Holdings Co | Lotte Data vs. Busan Industrial Co | Lotte Data vs. Busan Ind | Lotte Data vs. Mirae Asset Daewoo |
| SK Hynix vs. Dongsin Engineering Construction | SK Hynix vs. Doosan Fuel Cell | SK Hynix vs. Daishin Balance 1 | SK Hynix vs. Total Soft Bank |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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