Correlation Between SK Hynix and Telkom SA

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

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

Diversification Opportunities for SK Hynix and Telkom SA

-0.19

Correlation Coefficient

SK Hynix  Telkom SA

Good diversification

The 3 months correlation between HY9H and Telkom is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SK hynix and Telkom SA SOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom SA SOC 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 Telkom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom SA SOC has no effect on the direction of SK Hynix i.e., SK Hynix and Telkom SA go up and down completely randomly.

Pair Corralation between SK Hynix and Telkom SA

Assuming the 90 days trading horizon SK hynix is expected to generate 1.65 times more return on investment than Telkom SA. However, SK Hynix is 1.65 times more volatile than Telkom SA SOC. It trades about 0.08 of its potential returns per unit of risk. Telkom SA SOC is currently generating about 0.05 per unit of risk. If you would invest  11,300  in SK hynix on December 21, 2024 and sell it today you would earn a total of  1,800  from holding SK hynix or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

SK hynix  vs.  Telkom SA SOC

SK hynix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SK hynix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SK Hynix reported solid returns over the last few months and may actually be approaching a breakup point.

Telkom SA SOC

Risk-Adjusted Performance

Insignificant

Over the last 90 days Telkom SA SOC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak essential indicators, Telkom SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SK Hynix and Telkom SA

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

The idea behind SK hynix and Telkom SA SOC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.