Correlation Between SK Hynix and Fastly

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

By analyzing existing cross correlation between SK hynix and Fastly Inc, you can compare the effects of market volatilities on SK Hynix and Fastly 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 Fastly. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Fastly.

Diversification Opportunities for SK Hynix and Fastly

-0.47

Correlation Coefficient

SK Hynix  Fastly

Very good diversification

The 3 months correlation between HY9H and Fastly is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SK hynix and Fastly Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastly Inc 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 Fastly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastly Inc has no effect on the direction of SK Hynix i.e., SK Hynix and Fastly go up and down completely randomly.

Pair Corralation between SK Hynix and Fastly

Assuming the 90 days trading horizon SK hynix is expected to generate 0.87 times more return on investment than Fastly. However, SK hynix is 1.15 times less risky than Fastly. It trades about 0.05 of its potential returns per unit of risk. Fastly Inc is currently generating about 0.02 per unit of risk. If you would invest  5,999  in SK hynix on October 5, 2024 and sell it today you would earn a total of  5,501  from holding SK hynix or generate 91.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SK hynix  vs.  Fastly Inc

SK hynix

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fastly Inc

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Fastly Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Fastly unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SK Hynix and Fastly

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

The idea behind SK hynix and Fastly Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.