Correlation Between SK Hynix and Doosan Solus

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Can any of the company-specific risk be diversified away by investing in both SK Hynix and Doosan Solus 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 Doosan Solus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Doosan Solus Co, you can compare the effects of market volatilities on SK Hynix and Doosan Solus 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 Doosan Solus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Doosan Solus.

Diversification Opportunities for SK Hynix and Doosan Solus

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between 000660 and Doosan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Doosan Solus Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Solus 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 Doosan Solus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Solus has no effect on the direction of SK Hynix i.e., SK Hynix and Doosan Solus go up and down completely randomly.

Pair Corralation between SK Hynix and Doosan Solus

Assuming the 90 days trading horizon SK Hynix is expected to generate 1.09 times more return on investment than Doosan Solus. However, SK Hynix is 1.09 times more volatile than Doosan Solus Co. It trades about 0.14 of its potential returns per unit of risk. Doosan Solus Co is currently generating about 0.02 per unit of risk. If you would invest  16,900,700  in SK Hynix on December 25, 2024 and sell it today you would earn a total of  4,249,300  from holding SK Hynix or generate 25.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.25%
ValuesDaily Returns

SK Hynix  vs.  Doosan Solus Co

 Performance 
       Timeline  
SK Hynix 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SK Hynix are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SK Hynix sustained solid returns over the last few months and may actually be approaching a breakup point.
Doosan Solus 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Solus Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Doosan Solus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SK Hynix and Doosan Solus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SK Hynix and Doosan Solus

The main advantage of trading using opposite SK Hynix and Doosan Solus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Doosan Solus 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 Doosan Solus will offset losses from the drop in Doosan Solus' long position.
The idea behind SK Hynix and Doosan Solus 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.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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