Correlation Between SK Hynix and Kroger
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Kroger 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 Hynix and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK hynix and The Kroger Co, you can compare the effects of market volatilities on SK Hynix and Kroger 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 Hynix with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Kroger.
Diversification Opportunities for SK Hynix and Kroger
Good diversification
The 3 months correlation between HY9H and Kroger is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SK hynix and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and SK Hynix 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 hynix are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Kroger has no effect on the direction of SK Hynix i.e., SK Hynix and Kroger go up and down completely randomly.
Pair Corralation between SK Hynix and Kroger
Assuming the 90 days trading horizon SK hynix is expected to generate 3.58 times more return on investment than Kroger. However, SK Hynix is 3.58 times more volatile than The Kroger Co. It trades about 0.13 of its potential returns per unit of risk. The Kroger Co is currently generating about -0.06 per unit of risk. If you would invest 11,500 in SK hynix on November 3, 2024 and sell it today you would earn a total of 1,500 from holding SK hynix or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK hynix vs. The Kroger Co
Performance |
| Timeline |
| SK hynix |
| The Kroger |
SK Hynix and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Kroger
The main advantage of trading using opposite SK Hynix and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Kroger 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 Kroger will offset losses from the drop in Kroger's long position.The idea behind SK hynix and The Kroger Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kroger vs. Eurasia Mining Plc | Kroger vs. MAGNUM MINING EXP | Kroger vs. ANGLO ASIAN MINING | Kroger vs. De Grey Mining |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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