Correlation Between SK Hynix and United States

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

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

Diversification Opportunities for SK Hynix and United States

-0.34

Correlation Coefficient

SK Hynix  United States

Very good diversification

The 3 months correlation between HY9H and United is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SK hynix and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of SK Hynix i.e., SK Hynix and United States go up and down completely randomly.

Pair Corralation between SK Hynix and United States

Assuming the 90 days trading horizon SK Hynix is expected to generate 1.48 times less return on investment than United States. In addition to that, SK Hynix is 1.27 times more volatile than United States Cellular. It trades about 0.07 of its total potential returns per unit of risk. United States Cellular is currently generating about 0.13 per unit of volatility. If you would invest  5,000  in United States Cellular on October 8, 2024 and sell it today you would earn a total of  1,050  from holding United States Cellular or generate 21.0% return on investment over 90 days.

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

SK hynix  vs.  United States Cellular

SK hynix

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SK hynix are ranked lower than 5 (%) 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.

United States Cellular

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United States reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SK Hynix and United States

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

The idea behind SK hynix and United States Cellular 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.