Correlation Between SK Holdings and Haesung DS

Can any of the company-specific risk be diversified away by investing in both SK Holdings and Haesung DS 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 Holdings and Haesung DS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SK Holdings Co and Haesung DS Co, you can compare the effects of market volatilities on SK Holdings and Haesung DS 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 Holdings with a short position of Haesung DS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Holdings and Haesung DS.

Diversification Opportunities for SK Holdings and Haesung DS

0.88

Correlation Coefficient

SK Holdings  Haesung DS

Very poor diversification

The 3 months correlation between 034730 and Haesung is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SK Holdings Co and Haesung DS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haesung DS and SK Holdings 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 Holdings Co are associated (or correlated) with Haesung DS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haesung DS has no effect on the direction of SK Holdings i.e., SK Holdings and Haesung DS go up and down completely randomly.

Pair Corralation between SK Holdings and Haesung DS

Assuming the 90 days trading horizon SK Holdings Co is expected to under-perform the Haesung DS. But the stock apears to be less risky and, when comparing its historical volatility, SK Holdings Co is 1.41 times less risky than Haesung DS. The stock trades about -0.09 of its potential returns per unit of risk. The Haesung DS Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,225,000  in Haesung DS Co on September 25, 2024 and sell it today you would earn a total of  125,000  from holding Haesung DS Co or generate 5.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

SK Holdings Co  vs.  Haesung DS Co

SK Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Haesung DS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haesung DS Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SK Holdings and Haesung DS

The main advantage of trading using opposite SK Holdings and Haesung DS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Holdings position performs unexpectedly, Haesung DS 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 Haesung DS will offset losses from the drop in Haesung DS's long position.

The idea behind SK Holdings Co and Haesung DS 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.