Correlation Between SK Hynix and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Hanshin Construction 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 Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Hanshin Construction Co, you can compare the effects of market volatilities on SK Hynix and Hanshin Construction 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 Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Hanshin Construction.
Diversification Opportunities for SK Hynix and Hanshin Construction
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 000660 and Hanshin is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction 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 Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of SK Hynix i.e., SK Hynix and Hanshin Construction go up and down completely randomly.
Pair Corralation between SK Hynix and Hanshin Construction
Assuming the 90 days trading horizon SK Hynix is expected to generate 1.25 times more return on investment than Hanshin Construction. However, SK Hynix is 1.25 times more volatile than Hanshin Construction Co. It trades about 0.06 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.01 per unit of risk. If you would invest 16,253,000 in SK Hynix on September 13, 2024 and sell it today you would earn a total of 1,357,000 from holding SK Hynix or generate 8.35% 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. Hanshin Construction Co
Performance |
Timeline |
SK Hynix |
Hanshin Construction |
SK Hynix and Hanshin Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK Hynix and Hanshin Construction
The main advantage of trading using opposite SK Hynix and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.SK Hynix vs. Cube Entertainment | SK Hynix vs. Dreamus Company | SK Hynix vs. LG Energy Solution | SK Hynix vs. Dongwon System |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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