Correlation Between Shinhan WTI and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI 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 Shinhan WTI and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan WTI Futures and SK Hynix, you can compare the effects of market volatilities on Shinhan WTI 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 Shinhan WTI with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and SK Hynix.
Diversification Opportunities for Shinhan WTI and SK Hynix
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinhan and 000660 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Shinhan WTI 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 Shinhan WTI Futures 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 Shinhan WTI i.e., Shinhan WTI and SK Hynix go up and down completely randomly.
Pair Corralation between Shinhan WTI and SK Hynix
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to under-perform the SK Hynix. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan WTI Futures is 1.6 times less risky than SK Hynix. The stock trades about -0.08 of its potential returns per unit of risk. The SK Hynix is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 19,920,000 in SK Hynix on November 28, 2024 and sell it today you would earn a total of 380,000 from holding SK Hynix or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan WTI Futures vs. SK Hynix
Performance |
| Timeline |
| Shinhan WTI Futures |
| SK Hynix |
Shinhan WTI and SK Hynix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and SK Hynix
The main advantage of trading using opposite Shinhan WTI and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI 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.| Shinhan WTI vs. Husteel | Shinhan WTI vs. Wonil Special Steel | Shinhan WTI vs. ADTechnology CoLtd | Shinhan WTI vs. Dongil Steel Co |
| SK Hynix vs. Daejoo Electronic Materials | SK Hynix vs. Hana Materials | SK Hynix vs. INNOX Advanced Materials | SK Hynix vs. Lake Materials 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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