Correlation Between SK IE and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both SK IE and Solus Advanced 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 IE and Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK IE Technology and Solus Advanced Materials, you can compare the effects of market volatilities on SK IE and Solus Advanced 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 IE with a short position of Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK IE and Solus Advanced.
Diversification Opportunities for SK IE and Solus Advanced
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 361610 and Solus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SK IE Technology and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials and SK IE 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 IE Technology are associated (or correlated) with Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of SK IE i.e., SK IE and Solus Advanced go up and down completely randomly.
Pair Corralation between SK IE and Solus Advanced
Assuming the 90 days trading horizon SK IE Technology is expected to generate 1.18 times more return on investment than Solus Advanced. However, SK IE is 1.18 times more volatile than Solus Advanced Materials. It trades about -0.12 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about -0.16 per unit of risk. If you would invest 3,250,000 in SK IE Technology on September 14, 2024 and sell it today you would lose (835,000) from holding SK IE Technology or give up 25.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SK IE Technology vs. Solus Advanced Materials
Performance |
Timeline |
SK IE Technology |
Solus Advanced Materials |
SK IE and Solus Advanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SK IE and Solus Advanced
The main advantage of trading using opposite SK IE and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK IE position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.SK IE vs. Asiana Airlines | SK IE vs. ABCO Electronics Co | SK IE vs. Anam Electronics Co | SK IE vs. Lotte Data Communication |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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