Correlation Between Automobile and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Automobile 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 Automobile and SK Hynix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and SK Hynix, you can compare the effects of market volatilities on Automobile 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 Automobile with a short position of SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and SK Hynix.
Diversification Opportunities for Automobile and SK Hynix
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and 000660 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix and Automobile 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 Automobile Pc 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 Automobile i.e., Automobile and SK Hynix go up and down completely randomly.
Pair Corralation between Automobile and SK Hynix
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the SK Hynix. In addition to that, Automobile is 1.04 times more volatile than SK Hynix. It trades about -0.06 of its total potential returns per unit of risk. SK Hynix is currently generating about 0.03 per unit of volatility. If you would invest 16,502,600 in SK Hynix on September 25, 2024 and sell it today you would earn a total of 457,400 from holding SK Hynix or generate 2.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Automobile Pc vs. SK Hynix
Performance |
Timeline |
Automobile Pc |
SK Hynix |
Automobile and SK Hynix Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Automobile and SK Hynix
The main advantage of trading using opposite Automobile and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile 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.Automobile vs. Woori Technology Investment | Automobile vs. Samsung Card Co | Automobile vs. Korea Real Estate | Automobile vs. CHOROKBAEM PANY Co |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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