Correlation Between FNSTech and SK Holdings
Can any of the company-specific risk be diversified away by investing in both FNSTech and SK Holdings 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 FNSTech and SK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and SK Holdings Co, you can compare the effects of market volatilities on FNSTech and SK Holdings 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 FNSTech with a short position of SK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and SK Holdings.
Diversification Opportunities for FNSTech and SK Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FNSTech and 034730 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings and FNSTech 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 FNSTech Co are associated (or correlated) with SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of FNSTech i.e., FNSTech and SK Holdings go up and down completely randomly.
Pair Corralation between FNSTech and SK Holdings
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.96 times more return on investment than SK Holdings. However, FNSTech is 1.96 times more volatile than SK Holdings Co. It trades about 0.05 of its potential returns per unit of risk. SK Holdings Co is currently generating about 0.0 per unit of risk. If you would invest 979,000 in FNSTech Co on October 24, 2024 and sell it today you would earn a total of 72,000 from holding FNSTech Co or generate 7.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
FNSTech Co vs. SK Holdings Co
Performance |
Timeline |
FNSTech |
SK Holdings |
FNSTech and SK Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FNSTech and SK Holdings
The main advantage of trading using opposite FNSTech and SK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech position performs unexpectedly, SK Holdings 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 Holdings will offset losses from the drop in SK Holdings' long position.FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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