Correlation Between QUALCOMM Incorporated and SK Hynix

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

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

Diversification Opportunities for QUALCOMM Incorporated and SK Hynix

0.77

Correlation Coefficient

QUALCOMM Incorporated  SK Hynix

Poor diversification

The 3 months correlation between QUALCOMM and HY9H is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding QUALCOMM Incorporated and SK hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK hynix and QUALCOMM Incorporated 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 QUALCOMM Incorporated are associated (or correlated) with SK Hynix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK hynix has no effect on the direction of QUALCOMM Incorporated i.e., QUALCOMM Incorporated and SK Hynix go up and down completely randomly.

Pair Corralation between QUALCOMM Incorporated and SK Hynix

Assuming the 90 days horizon QUALCOMM Incorporated is expected to generate 0.62 times more return on investment than SK Hynix. However, QUALCOMM Incorporated is 1.62 times less risky than SK Hynix. It trades about 0.15 of its potential returns per unit of risk. SK hynix is currently generating about 0.04 per unit of risk. If you would invest  15,366  in QUALCOMM Incorporated on March 4, 2024 and sell it today you would earn a total of  3,034  from holding QUALCOMM Incorporated or generate 19.74% return on investment over 90 days.

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

QUALCOMM Incorporated  vs.  SK hynix

QUALCOMM Incorporated

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QUALCOMM Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QUALCOMM Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

SK hynix

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SK hynix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SK Hynix may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with QUALCOMM Incorporated and SK Hynix

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

The idea behind QUALCOMM Incorporated and SK hynix 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.